The Impact of Infrastructure on Real Estate Prices
Research shows that infrastructure is one of the most powerful creators of capital growth in real estate. For investors, planned infrastructure development such as transport links, medical or educational infrastructure or changes to zonings can be the key to identifying suburbs with future growth potential. Infrastructure improvements will make properties more attractive to tenants through providing better transport or amenities and will often bring a larger or different population demographic to the area. For example, major developments such as technology parks will bring the influx of a skilled workforce and management into the area. Research from Hotspotting also shows that city suburbs with rail services have better capital growth on average than those without, so it makes sense to look at areas that have new rail links planned when seeking future growth locations.
How do you discover areas that will benefit from new infrastructure, and changes that may have a negative impact on the appeal of your property? According to property commentator Terry Ryder “following the infrastructure trail”, particularly transport infrastructure , will help you find areas of highest capital growth potential. One key area he identifies with high levels of new infrastructure is Sydney’s North West around the emerging growth region of Rouse Hill. This area is benefitting from the new Northwest Rail Link, currently under construction, as well as significant road upgrades and new motorways including the 9km NorthConnex. Information on all NSW new proposed and under construction transport, health and education infrastructure projects can be found at: https://www.nsw.gov.au/tomorrows-sydney.
It’s also important to determine whether new or existing infrastructure might impact adversely on the rental appeal or capital growth potential of a possible property investment. When conveyancers carry out searches on a property, it is not usually within their brief to check potential impact factors outside the property’s boundaries, so they may not pick up the fact that a proposed freeway will pass across the end of the street. To increase your chances of discovering these types of potential negative impacts, check which standard searches will be carried out by the conveyancer and then either do your own additional research around an area or give your solicitor or conveyancer detailed instructions as to what you want them to look for. This will depend on what you plan for the property and what you believe will impact on the property’s capital and rental value.
It’s also important to determine whether new or existing infrastructure might impact adversely on the rental appeal or capital growth potential of a possible property investment. When conveyancers carry out searches on a property, it is not usually within their brief to check potential impact factors outside the property’s boundaries, so they may not pick up the fact that a proposed freeway will pass across the end of the street. To increase your chances of discovering these types of potential negative impacts, check which standard searches will be carried out by the conveyancer and then either do your own additional research around an area or give your solicitor or conveyancer detailed instructions as to what you want them to look for. This will depend on what you plan for the property and what you believe will impact on the property’s capital and rental value.
President of the Real Estate Institute of NSW, Malcolm Gunning, recommends checking the local council website first for planning information and the surrounding zoning. If the zoning is mixed use or high density residential, then this may be a problem for you if you’re buying a family home but not if it’s an older block of apartments that you plan to redevelop. An additional aspect to check is the number of proposed apartment developments in the area, to make sure rental on your property won’t be impacted by an oversupply. If your conveyancer isn’t experienced in this type of research, then you can employ a town planner who knows the local Council area to get an indepth report. The NSW Department of Planning and Environment also offers an online mapping service where buyers can search for a property and view the various planning applications in the surrounding area at https://www.planning.nsw.gov.au/. You can also check planning constraints on your proposed purchase, and also look for “land reservation acquisition” areas, which means they have been reserved by the government for future public land for recreation, infrastructure including roads, rail or airports or other public utilities. This tool can also help you identify areas with positive infrastructure impacts. And, of course, it’s also always worth a look on google to see if any information about a proposed development or infrastructure work has been in the public domain. As a final note, if you’re buying a strata property, ensure you do a strata search to identify any upcoming major outgoings and building issues.
