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Infrastructure spending to push population and price growth

Aerial photo of Katoomba
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Improved access to the holiday town of Katoomba will likely have a positive impact on home values. Photo: Shutterstock

Infrastructure spending to push population and price growth

Population growth and infrastructure spending are often key elements to successful property investment strategies. API Magazine takes a look at the federal budget commitments that will have the biggest impacts on property markets in Australia’s fastest-growing regions.

Population growth and infrastructure spending are key elements to successful property investment strategies, with both elements often combining to result in strong capital growth as well as lifts in rental yields.

Treasurer Josh Frydenberg’s second pandemic budget included new infrastructure spending commitments of $15.2 billion, aimed at creating jobs and improving transport networks and connectivity between capital cities and the regions.

Australian Property Investor Magazine drills down on the new federal budget transport upgrades that are likely to have the biggest impacts on property markets in Australia’s fastest-growing regions.

New South Wales

Project Value Fastest-growing areas Population growth 2019-20
Great Western Highway $2.03bn Riverstone - Marsden Park 28%
Princes Highway $400m Cobbitty - Leppington 15%
Mount Ousley Interchange $240m Rouse Hill - Beaumont Hills 14%
Sources: Treasury.gov.au, abs.gov.au

An ambitious plan to extend the Great Western Highway by creating Australia’s longest tunnel under the Blue Mountains between Katoomba and Lithgow highlighted the new funding commitments in New South Wales in this year’s budget.

Katoomba’s lifestyle attributes were a key attractor for many of the 5,400 people that left Sydney for a regional location in 2019-20, with buyer demand pushing up median house prices in the Blue Mountains town by nearly $100,000 since midway through last year.

Rental growth in Katoomba was more subdued over the same period, but landlords still enjoyed a boost, with median rents rising from $420 per week in June 2020 to $450/week in March.

Median house prices also rose significantly in Lithgow since the midpoint of 2020, rising from around $302,000 to just less than $350,000 in March.

Other major commitments by the federal government, including the Princes Highway upgrade and a new interchange at Mount Ousley, promise to improve connectivity to the NSW South Coast, which has emerged in recent months as one of the state’s most in-demand regions.

However, NSW’s fastest growing regions remain west of Sydney, with Riverstone - Marsden Park recording the highest population growth of any region in Australia in the 2019-20 financial year, according to the Australian Bureau of Statistics. 

The ABS said 8,856 people moved to Riverstone - Marsden Park in 2019-20, a legacy of a significant round of infrastructure spending announced by the NSW state government last year.

Median house prices rose by around $70,000 in Riverstone between June 2020 and March this year, with a similar lift of around $65,000 recorded in Marsden Park, according to CoreLogic.

Also in the North West and Hills, Rouse Hill - Beaumont Hills also grew at a fast rate, recording 4,403 new residents in 2019-10.

A total of 14 North West and Hills infrastructure projects were announced midway through 2020, collectively valued at $145 million, designed to improve the liveability of the area and provide new employment options.

Victoria

Project Value Fastest-growing areas Population growth 2019-20
Melbourne Intermodal Terminal $2bn Mickleham - Yuroke 33%
Pakenham Roads Upgrade $307m Rockbank - Mount Cottrell 29%
Monash Roads Upgrade $203.4m Wollert 20%
Sources: Treasury.gov.au, abs.gov.au

Victoria’s biggest new transport infrastructure spend is set to have a big impact on the liveability of a large swathe of suburbs in Melbourne’s north, or west, depending on where the state government decides to build a new $2 billion freight transfer station.

Two sites, at Truganina in the west and Beveridge in the north, have been earmarked for Melbourne’s new Intermodal Terminal, which will become the southern hub of a multi-billion inland freight rail line linking the Victorian capital with Brisbane.

The initiative promises to remove 5,500 truck movements from Melbourne’s roads, which will likely deliver a value uplift across many suburbs, depending on which option the state government goes ahead with. 

Melbourne’s eastern suburbs will also receive a transport connectivity boost, with more than $500 million committed to road upgrades around Pakenham and the City of Monash.

But like NSW, Victoria’s fastest growing areas in terms of population growth were indicative of the pandemic’s trend of people moving away from the CBD that took hold over the pandemic.

Population in Mickleham - Yuroke, located around 29km north of the Melbourne CBD, surged by 33 per cent in 2019-20, driving up the median house price in Mickleham by just less than $50,000 since June last year.

Also in the north, Wollert recorded big growth in terms of population (20 per cent, or 3,300 people), resulting in median house price growth of around $38,000 since June last year.

In the outer west, Rockbank - Mount Cottrell grew in population by 29 per cent, with the region having the potential to grow further on the back of increased employment options if Truganina is chosen as the location for the freight hub.

Queensland

Project Value Fastest-growing areas Population growth 2019-20
Inland Freight Route Upgrade $400m Ripley 20%
Bruce Highway $400m Pallara - Willawong 16%
Cairns Western Arterial Road Duplication $240m Pimpama 14%
Sources: Treasury.gov.au, abs.gov.au

Queensland’s new infrastructure commitments in the 2021 budget include major upgrades to freight routes as well as highway upgrades linking some of the Sunshine State’s most sought-after locations.

South East Queensland emerged as one of Australia’s hottest property markets in the back end of 2020, and all indicators so far in 2021 point to a continuation of rapid price growth and tightening of rental markets.

Upgrades to the Bruce Highway will help Brisbane residents shift to the Sunshine Coast quicker, while those looking for a sea-change further north will no doubt appreciate the shorter travel times associated with a duplication of the Cairns Western Arterial Road.

In terms of population growth, Queensland’s fastest growing area, Ripley, is a result of sustained infrastructure spending by the state government over the last decade.

In 2010 Ripley Valley, southeast of Brisbane, was identified as a Priority Development Area, with the region having the potential to grow to 50,000 dwellings, housing around 120,000 people.

Ripley’s relative affordability has been a key driver for its population growth, with a median house price of around $420,000 attractive for entry-level buyers.

Population growth also accelerated in Brisbane’s south, with a 16 per cent rise in the number of people living in Pallara - Willawong

Median house prices have risen by about $31,000 in Pallara since June last year, while rents stayed steady at around $460/week over the same period.

Western Australia

Project Value Fastest-growing areas Population growth 2019-20
Metronet $379m Alkimos - Eglinton 10%
Great Eastern Highway $200m Hazlemere - Guildford 7.4%
Reid Highway $112.5m North Coogee 7.1%
Sources: Treasury.gov.au, abs.gov.au

Western Australia’s big-ticket budget items include the continuing investment in passenger rail routes as part of the state government’s Metronet program, as well as major highway upgrades in Perth’s north and east. 

New funding commitments for Metronet projects around Armadale in Perth’s eastern hills region come at a time when prices are growing rapidly, albeit from a low base.

In June last year, Armadale’s median house price was just over $218,000 and was among Perth’s most affordable locations.

At the end of March, that median house price had risen to just less than $270,000, while over the same period time median rents rose by around $30/week.

WA’s fastest growing areas were the far northern suburbs of Alkimos and Eglinton, with population growth of 10 per cent pushing up median prices by around $60,000 in Alkimos and $70,000 in Eglinton since the middle of last year.

Other key infrastructure projects likely to have an impact on house prices in Perth include an $85 million commitment to improve roads to the north of Perth Airport, an initiative which will complement the $1.86 billion Forrestfield Airport Link Metronet line which will deliver new stations at Redcliffe, the airport and at High Wycombe.

The median house price in Redcliffe has responded accordingly to the massive infrastructure upgrade, rising by about $70,000 since June last year, while High Wycombe’s median value rose by around $58,000 over the same period.

A $55 million duplication of the Mandurah Estuary Bridge will also likely have a positive impact on values in Mandurah, located 65km south of Perth.

Mandurah house prices are on an upwards trajectory, rising by just less than $60,000 since June last year, but remain at the affordable end of the scale at around $298,000.

South Australia

Project Value Fastest-growing areas Population growth 2019-20
North-South Corridor $2.6bn Munno Para West - Angle Vale 6.6%
Truro Bypass $161.6m Mount Barker 4.9%
Augusta Highway Duplication Stage 2 $148m Lewiston - Two Wells 4.6%
Sources: Treasury.gov.au, abs.gov.au

South Australia’s North-South Corridor infrastructure project promises to reduce travel times by up to 24 minutes through an upgrade of the road network between River Torrens and Darlington

Described by South Australian Premier Steven Marshall as the state’s most important infrastructure upgrade, with a combination of tunnels and new roads to create a 78-kilometre non-stop motorway.

Suburbs stretching from Gawler in the north to Old Noarlunga in the south are set to benefit in a big way from the investment, with $5.4 billion committed to the North-South corridor project by state and federal governments to date.

Outside of Adelaide, the $161.6 million Truro Bypass will improve connectivity to one of the state’s fastest growing regions around Mount Barker.

Median house prices have risen by $36,000 since June last year at Mount Barker, which is located around 33km south east of the Adelaide CBD in the city's hills region.

South Australia’s fastest growing region, Munno Para West - Angle Vale also recorded a solid lift in median house prices since the midpoint of 2020, with the median in Munno Para West up around $41,000 over the period.

Angle Vale surged more strongly, with its median house price growing from around $416,000 in June 2020 to $531,000 in March this year.

Rents are also growing strongly in Angle Vale, rising from $355/week in December to $420/week in March.

 

Median house price and rental data quoted in this article is provided by CoreLogic, and is available on the API Magazine Research HQ.

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