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The suburbs set to boom from Federal Budget spending

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While the 2018 Budget does allocate a lot of funding towards infrastructure spend, it mostly comes in the form of road and rail projects.

This is a strong vision for the future of the country’s transport corridors but does seem to be lacking in projects for long-term job creation.

Let’s get real for a moment – how much sustainable job creation does a road project bring to the area?

When we evaluate a project’s impact on the property market we look closely at key drivers like jobs created off the back of that project, be it direct employment or indirect through the supply chain.

In turn, this will generate interstate migration, population growth and economic stimulus to the local business sector – all of which drive price growth in the property market and rental demand. Without these key elements, projects have very little short-term or immediate impact on the market and are better considered as a longer-term vision for the liveability of an area.

To break it down on a local level there are some benefits to each area from the proposed government spend, but they may not be the smoking gun that investors and home owners were hoping for.

Victoria

Investor hub Geelong is set for a win with an upgrade to the Geelong rail line as part of the $7.8 billion allocation for Victoria.

This spending will push Melbournites out of the city and towards other parts of the state due to the increased ease of access into the city coupled with the spending on the Melbourne airport rail link, north east link and the Frankston line.

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Inner urban Melbourne is already getting pricey and many buyers are feeling the pinch when trying to buy close to the city.

So, this upgrade will make it easier for buyers and renters alike to move a little further out to more affordable locations like Geelong and still work in the CBD, resulting in long-term increased demand for these satellite locations outside of Melbourne CBD, as the commute is now sustainable.

The Monash railway will also benefit which will improve access to the university and again create a demand for housing in the outer suburbs, as well as making this a more appealing option for students. This can only have a positive impact on the rental demand for these more accessible locations.

NSW

With a large proportion of the budget for NSW’s infrastructure spending being allocated to Western Sydney, investors will likely view this as a hotspot but the changes are not due for many years so this growth will be slow.

While current prices in Sydney have not exactly eased, the speculation around the Western Sydney Airport and adjacent rail link has not aided a potential price drop.

 

We have seen an increase of many investors taking a speculative approach and land banking in these areas with little knowledge of where and how the infrastructure will roll out.

This can be a risky strategy as a major road project can have a positive impact in many regards, but if you have land that will be in a noise corridor or will be affected by access to main roads and freeways adjacent this can also negatively impact your property. Many investors are jumping into deals without this information readily available.

Also, part of the $1.5 billion spend for NSW is the Pacific Highway Coffs Harbour bypass likely to boost the demand for holiday style housing in Northern NSW by investors also taking a speculative approach.

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Queensland

Units in Brisbane are oversupplied and this will not change anytime soon.

The budget has distributed a huge $5.2 billion to the state of Queensland with $300 million established for the Brisbane Metro project.

The remainder of the infrastructure spend here is to increase accessibility into the city which will boost the demand for inner city and outer suburbs residential areas. Freestanding houses will be the key players in this market.

The Great Barrier Reef has not been overlooked with particular mention of a $1.4 billion commitment to improving the area including support to the World Heritage-listed site and the jobs it creates as well as an improvement to water quality, coral restoration and adaption research and more.

This can only boost tourism, thus opening up more opportunities for holiday style accommodation to the area and tourism dollars being spent to help more local business thrive.  In particular, there has been a $443.8 million allocation to partner with the Great Barrier Reef Foundation to support the reef.

Airbnb investors should take a look into this area as the boost in the reef itself will direct more tourism to the area and thus create a demand for accommodation with the Reef and surrounding suburbs.

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Western Australia

Whilst still not yet through all the pain of the troubled economy of years gone by, the $2.6 billion allocation for Western Australia infrastructure will hopefully help the market recover sooner.

The $944 million commitment to tackle congestion in Perth will make it more of a liveable city coupled with the $1.1 billion for the Metronet rail project that will soon make this state appealing to investors as the demand for housing will increase.

South Australia

South Australia has been defying the odds for quite some time now and the good news just keeps on coming.

Adelaide is the city where travelling into work for most commuters is around the 20-25-minute mark and with the $1.8 billion commitment to infrastructure, this will become more achievable for residents of more suburbs especially with the Gawler rail line electrification and the North-South Road Corridor projects.

Regional Australia

The many regional areas of Australia will also have funding injected directly into them with more money being assigned to the Building Better Regions fund and the Regional Growth Fund.

This will see regional areas such as Griffith and Ballarat offering some relief to the struggling agriculture communities with more diverse employment opportunities to get them through these tough times. Hopefully this will underpin some of the recent volatilities felt in our regional markets off the back of the drought.

 

Written by Anna Porter

Anna Porter

Anna Porter is the founder of Suburbanite. She is a property valuer, investment adviser, property market commentator and author of Whistle Blower.

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