When new infrastructure impacts house prices

An example of the upward effect of new road, rail and health facilities on property is the extension of Sydney's inner west light rail from Lilyfield to Dulwich Hill.

It's spurred property price growth in Dulwich Hill and other areas close to the recently opened stations.

This rail link connects the inner west to Sydney's main station, Central, a hub for metropolitan and regional rail services. Properties within a 10-minute walk of the new stations have especially attracted a premium, but the wider suburbs have also seen a lift.

Over 12 months the median price of a house in Dulwich Hill jumped 20.5% to $1.02 million, Leichhardt saw an increase of 16.4% to $950,000 and Lewisham a rise of 16.7% to $1.025, according to Australian Property Monitors. Infrastructure is the top creator of wealth in real estate, according to hotspotting.com.au founder Terry Ryder.

He regularly reports on areas likely to take off due to transport and other types of projects.

Hotspotting's latest list of the top 10 areas to benefit from new work, released in February, includes Aldinga Beach and Seaford in South Australia, which Ryder says will benefit from an upgrade to the Southern Expressway which is under way, improving traffic flow. And there are plans to extend an existing rail line to connect both suburbs to Adelaide's CBD.

Queensland is pouring money into infrastructure, the Hotspotting report singling out Kelvin Grove, Redcliffe and the entire Sunshine Coast as benefiting. Kelvin Grove, with university, medical and retail facilities, will benefit from a $1.5 billion tunnel project.

A CBD rail connection is on the agenda for the Redcliffe Peninsula, a major hospital project is under way on the Sunshine Coast and an upgrade of the Sunshine Coast airport is in the pipeline. Already this area, which was flattened by the GFC, is starting to experience healthy house price growth, Mooloolaba(10.2%), Mudjimba (10% and Shelly Beach(10%) leading the way.

Property prices in some Sydney areas are due to benefit from a new wave of road, rail and airport facilities planned by the NSW government.

The long-promised north-west rail link is under way and scheduled to be completed by the end of 2019. While it will cause traffic disruption and construction noise while being built, long term the areas around the new stations - including Cherrybrook, Castle Hill, Kellyville and Rouse Hill - should see a boost to house prices.

And of course improved accessibility to these areas will result in more people moving to them and this is likely to open up new industries and job opportunities.

New infrastructure is not all upside for property owners however. You can live too close to roads and rail. The value of properties in these locations is likely to suffer rather than benefit.

Another development in Sydney's inner west, part of the planned WestConnex motorway which will link Sydney's west and south-west with the CBD, the airport and Port Botany, is having an opposite effect to the light rail extension as home buyers start to become wary.

Very few people want to live next to a busy motorway. Property investors and home owners can find out about infrastructure plans from their local council and state planning authorities. Major new initiatives are usually also well publicised in the media.

Spikes in property prices associated with new transport routes usually occur in two distinct phases, says Sydney buyer's agent Rich Harvey.

The first comes when the project is announced as buyers move in, aiming to capitalise on the potential of the area. But with some projects taking a long time to get off the ground, such as Sydney's north-west rail link , the expected quick boost to capital values might not happen.

The second phase of price growth comes once the new transport project is in place and people realise its benefits, such as the extension to Sydney's inner-west light rail.

This boost is easier to time, although the gains for those who wait for this stage may not be as much as for those who took the risk and bought earlier. Keep in mind that not all projects live up to their predictions.

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