The Australian - March 2007
All roads lead to sea-change country for hungry investors
PROPERTY investors looking to make a killing should follow the new
roads penetrating deep into seachange country.
Why? Because two of the most powerful forces in creating real estate
hotspots are the seachange movement and new transport infrastructure.
Put the two together and you have a potent recipe for strong prices.
That's an important consideration for investors right now. Around
Australia there are numerous locations where the marriage of seachange
and transport infrastructure is creating hotspots. NSW, Queensland,
Victoria and Western Australia all have locations with this formidable
combination.
A few years ago seachange was constantly in the headlines. It's not any
more, which might suggest it's no longer a contender, but seachange is
continuing to drive tens of thousands of Australians towards the ocean
every year.
Demographer Bernard Salt says a typical year adds more than 60,000 to
the throngs living on the coast outside our main cities.
The peak year was 2003, when 68,000 Australians migrated to seachange
destinations. More recent figures suggest numbers are now running at
66,000 a year, still close to peak levels.
The trend is stronger in some parts of the country. The southwest of
Western Australia and coastal areas of Queensland near the Bowen Basin
stand out, suggesting that the resources boom is driving purchases of
seachange property in those areas.
Each year, when Salt publishes his Population Growth Report, seaside
locations always dominate the lists of leading growth areas.
The Gold Coast is the perennial front-runner, West Australian boom areas
such as Mandurah and Busselton always feature, and Queensland
municipalities that hug the coastline are usually prominent, including
Hervey Bay, Caloundra and Caboolture.
So seachange is still big business in real estate.
Transport infrastructure stirs the property pot as well. There are
several different manifestations of this genre, including bridges,
tunnels, and new or upgraded rail connections, which can all transform
the appeal of a location by making it more accessible. However, the big
kicker in this is a new motorway.
Brisbane research company Matusik Property Insights has undertaken
several studies on the impact on real estate values of the main
transport routes, including new motorways in Sydney and in southeast
Queensland.
The studies show that improved transport access can increase population
growth by 30 per cent, day-trip activity by 10 to 15 per cent,
residential sales by 150 to 175 per cent and site values by 110 to 120
per cent.
It also lowers the average age, with younger people moving in; increases
the amount of medium-density development; and fast-tracks new retail
development.
These are the kinds of figures that inspire ambitious property investors
to rush out and buy property in the path of progress.
There are any number of examples touching on the impact of major new
roads.
Take Sydney's M2, which changed perceptions of the Hills district
because it made a trip to the CBD 20 minutes faster after it was
completed in 1997.
In Castle Hill, West Pennant Hills, Baulkham Hills and Kellyville,
property values went nowhere for three to four years until 1996, then
started to take off.
From 1996 to 1998, the average annual growth in house prices was 14 to
15 per cent in Baulkham Hills, Castle Hill and Kellyville, compared with
the whole of Sydney average of 10 per cent.
In Kellyville, the median house price rose from $205,000 to above
$360,000 in four years. Values rose 21 per cent in 1996-97, ahead of the
1997 motorway completion, and a further 14 per cent in 1997-98.
These figures demonstrate one of the intriguing elements of the impact
of new roads: values rise before the motorway opens.
Usually there's an immediate impact when a new road is announced,
another when it starts construction and a third around completion.
Risk takers can make a killing by buying strategically as soon as a new
motorway is announced, but they run the risk of owning a dud if the
project doesn't proceed or takes 10 years to materialise. Politicians
are involved, so these things are often shrouded in uncertainty.
Most of the key projects that affect seachange locations are already
under construction.
Tweed Shire in northern NSW should be high on investors' hit-list
because it's a prime target for seachangers and is in line for a massive
boost when the Tugun Bypass is completed next year.
Many market analysts expect the Tweed to boom because the bypass will
improve access from southeast Queensland by removing a chronic
bottleneck.
Tweed Shire presents the appearance of a place that's booming already.
Developments under way or in planning total about $7.5 billion and the
region has become a state leader in population growth and job creation.
Further south, locations such as Ballina, and Yamba will also catch some
of the breeze from the Tugun Bypass coupled with ongoing improvements to
the Pacific Motorway.
Works on improving the motorway from Ballina to Yamba and beyond are
part of the ongoing upgrade of the Pacific Motorway from the Queensland
border south to Newcastle, which began in 1996 as a 10-year program and
has cost $2.3 billion to date.
The original program has now been extended with the injection of further
funds by both the federal and state governments.
About 250km of the Pacific Motorway is now double-lane, divided road and
a further 480km of the highway has works under construction, approved
for construction, or in advanced planning.
The Ballina bypass, an important component of this project, is a 12.4km
section of dual carriageway on which construction is due to start next
year.
All this translates into big benefits for property markets in this
precinct because it makes it easier for people in southern Queensland
and northern NSW to access these areas.
Victoria has more new transport infrastructure happening than any other
state and some of the beneficiaries include prime seachange destinations
such as the Surf Coast south of Geelong and the Gippsland Lakes region
east of Melbourne.
The trip to Paynesville or Metung from central Melbourne will be
shortened by 30 or 40 minutes once EastLink and the Pakenham Bypass are
completed.
Developers who appreciate the meaning of this are already prowling these
Gippsland locations in search of land to turn into housing estates.
In Western Australia the property boom has slipped into hibernation,
compliments of prices that rose too high too fast, but some areas will
weather the cyclical winter better than others.
Prime seaside locales south of Perth are candidates because new
infrastructure is in the offing.
Rail links are being extended south, and the Mandurah Bypass will
benefit not only Mandurah, the quintessential seachange success story,
but locations farther south such as Bunbury.
The bypass, otherwise known as the Peel Deviation, is part of the New
Perth Bunbury Highway.
Work started recently on the $450 million project, which will shave 30
minutes off the journey from Perth to Bunbury when completed in 2009.
The project will allow motorists to sidestep the problems of the two
existing routes south: the heavily populated areas in Mandurah and the
Dawesville Peninsula on the Old Coast Road, and the inland communities
on the Southwestern Highway.
The lifestyle centres further south, such as Busselton, Dunsborough and
Margaret River, will also benefit from the faster access to the capital.
Investors need to keep in mind that most of these locations have had
massive price rises in recent years (for example, a 44 per cent rise in
Bunbury's median house price last year) and further growth of that
magnitude is highly unlikely.
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