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The road to property riches

Wednesday, 6th Feb 2013

infrastructure

Why is transport infrastructure so important for property investors? And what type of projects can typically impact on property prices the most?

In recent months, the Western Australian Government has announced a number of significant investments in transport infrastructure. This may have pricked the ears of some property investors who recognise the importance of these projects in determining future property hotspots.

These developments generate demand for housing and can cause price rises in adjacent suburbs. Sometimes the benefit to an area is obvious, other times only the truly astute investors will recognise the flow-on effects.

So why is transport infrastructure so important? And what type of projects can typically impact on property prices?

An area’s “value” is based on many things including its proximity to major centres, lifestyle attributes, beauty, and safety. If new transport infrastructure improves an area in one of more of these factors, the value of the area should increase.

New infrastructure, such as major connecting roads, can greatly affect people’s perception of distance. In some instances, a suburb may have better access to the CBD than suburbs closer to the city because of better roads. But it’s not just distance that can be impacted. New infrastructure can also improve an area’s beauty and safety.

What types of infrastructure projects have the biggest impact? In Perth, projects involving the rail network (including the proposed light rail system), new major roads, or significant improvements to existing roads have the potential to impact on property values.

Extensions to the existing rail line can certainly improve the prospects of outlying suburbs by providing better access to the city. Similarly, the proposed light rail system will provide some suburbs that previously relied on buses with direct rail links to the CBD and other major centres.

It’s not just new roads that can make a different but even widening of roads can impact areas by reducing congestion and reducing travel times. Reconfiguring of roads and new bridges can also make a significant change.

How do investors take advantage of transport infrastructure developments? By investing in the relevant areas before buyers realise the full benefit of the projects.

Good transport infrastructure is vital for a thriving economy, and public transport in particular, is becoming increasingly important as our population swells and the price of petrol increases.

Next time you hear an announcement of a new transport infrastructure plan, think about how it will affect surrounding suburbs. Which areas will become more appealing as a result? Or better yet, start digging for yourself and find out those plans and projects that other investors won’t know about.