Perth infrastructure update – essential info for investors

Wednesday, 3rd Aug 2016
Categories: Market News, Newsletter

NEWSLETTER_Aug16_Feature Article imageAmid a once-in-a-generational transformation, Perth’s massive infrastructure investment program is creating a raft of opportunities for property investors. However, not all infrastructure projects will prove beneficial, as outlined in a new report from Momentum Wealth Research.

In its 2016 State Budget, the Western Australian government allocated $7.7 billion over the next 4 years on key public infrastructure projects with a focus on road and rail as well as place-making projects.

The objective of this massive infrastructure investment is to enhance Perth’s useability and liveability as the city’s population rises to 3.5 million residents.

The spin off for property markets is that public spending can lead to upwards pressure on property prices through increased amenity, higher economic activity and greater demand.

However, new infrastructure will not automatically lead to higher house prices, as various infrastructure projects will affect individual properties and markets in different ways.

A new report produced by Momentum Wealth Research, Perth Public Infrastructure Update 2016, identifies 14 of the city’s key public infrastructure projects and provides unique analysis on how these developments are likely to influence surrounding property markets.

In some instances, an infrastructure project may deliver obvious benefits to a particular market but may also have spin-off effects on other areas as well.

Take the $49 million Ellenbrook Rapid Bus Transit System, for example. This infrastructure will benefit residents in Ellenbrook and Aveley, with improved accessibility. However the Momentum Wealth Research report reveals that the infrastructure will also help to support Morley and Midland as key suburban activity centres, as identified by the state government.

On the other hand, it would be easy to assume that big-ticket infrastructure projects will help boost local property prices, but in reality the capital growth might only be minor.

The Momentum Wealth Research report explains that the construction of large-scale football stadiums, such as the $1 billion Perth Stadium, typically deliver negligible price growth for nearby residential properties.

Alternatively, smaller community infrastructure projects, such as the $24 million HBF Arena Upgrade, can deliver better price growth because they’re more likely to deliver tangible benefits to the area, such as additional amenity (i.e. fitness or family centres) and upgraded streetscapes.

While public infrastructure projects can be a good indicator for future residential property price growth, investors need to be aware that they’re not necessarily an immediate panacea for instant price growth.

Furthermore, investors also need to take a broader view when making investment decisions.

Other property price drivers, such as housing demand and supply, demographic shifts and changing structure plans, for example, also need to be taken into account.
To download your free copy of the Momentum Wealth Research report, Perth Public Infrastructure Update 2016, simply click here.