Bigger (infrastructure) not necessarily better for investors

Smaller community infrastructure projects can deliver better price growth to local property markets, because they’re more likely to deliver tangible benefits, such as improved amenity and upgraded streetscapes.

It’s simplistic to assume that big-ticket infrastructure developments will lead to higher house values, as smaller community projects can prove to be more beneficial for property investors.

When deciding on an investment location, it makes sense to consider areas that will benefit from new infrastructure projects, whether it be new roads, public transport, health or activity centres.

Such developments can lead to enhanced amenity and higher demand, which can boost local house prices.

However bigger isn’t necessarily better when it comes to infrastructure and property price growth, as outlined in a new report from Momentum Wealth’s research division.

Take the $1 billion Perth Stadium for example. The research report explains that the construction of large-scale football stadiums typically delivers negligible price growth for nearby residential properties.

Alternatively, smaller community infrastructure projects, such as the $24 million HBF Arena Upgrade in Joondalup, can deliver better price growth to local property markets because they’re more likely to deliver tangible benefits to the area, such as additional amenity (i.e. fitness or family centres) and upgraded streetscapes.

The research report also explains that investors also need to consider the less-obvious locations that are likely to benefit from new infrastructure, as these may make better investment locations.

The $49 million Ellenbrook Rapid Bus Transit System, for example, will benefit residents on Perth’s north-east urban fringe, specifically Ellenbrook and Aveley, through improved accessibility. However the Momentum Wealth research report reveals that the infrastructure will also help to support Morley, in Perth’s inner-metropolitan ring.

Morley represents a much smarter investment location because it’s significantly closer to the Perth CBD, the supply-side fundamentals are more favourable and it has been identified by the state government has a key suburban activity centre.

The Momentum Wealth research report, Perth Public Infrastructure Update Impacts on local property markets, has identified the city’s top government-funded infrastructure projects and provides unique insights and analysis as to how these developments may impact local property markets.

Perth is currently undergoing a once-in-a-generational transformation as the WA state government executes a massive infrastructure investment program that aims to enhance Perth’s useability and liveability as the city’s population grows to 3.5 million residents.

While new public infrastructure projects can be a good indicator for future residential property price growth, investors need to be aware of the different dynamics that are associated from project to project.

It’s also important that investors take a broader view when making investment decisions, and consider other factors other than new infrastructure projects.

Other property price drivers, such as housing demand and supply, demographic shifts and changing structure plans, for example, also need to be taken into account.

All but two Perth councils fail planning test

Just two of 29 Perth metropolitan councils have been given the tick for planning performance in a highly critical Property Council of Australia report to be released today.

Billed as the first independent assessment of its kind, the report found most councils were struggling to implement planning reforms, had outdated local planning schemes and did not monitor or review their performance.

The Department of Planning and WA Planning Commission were also criticised for taking too long to review new local planning schemes or amendments to existing schemes.

The Property Council has long been critical of the local government sector’s planning record, arguing inconsistencies hamper development and the State’s ability to meet its infill targets.

The cities of Melville and Belmont were the only councils deemed to have “a high level of planning performance” across strategic planning, statutory planning, delegation of approval to planning officers and timeliness of approvals.

Councils were assessed and given a score out of 23 based on whether they had a current local planning strategy, an up-to-date local planning scheme, appropriately delegated development applications to experts and processed planning applications within the required 60 days.

The report said performance monitoring in the planning system was “almost non-existent”.

The Town of Cambridge was the lowest ranked council because it had only just started work on a local planning strategy, had lower-than-average levels of delegation and no data on processing times.

Property Council WA executive director Lino Iacomella said the results were “concerning”.

Pockets of Perth property levelling out despite weak real estate market

POCKETS of Perth are showing signs of levelling out, despite the city’s overall market weakness.

Latest figures from CoreLogic RP Data rate Bateman, Hocking and Pearsall as the suburbs with the lowest average difference between the asking and selling price, amounting to a vendor discount of between 4 per cent and 4.2 per cent.

This is compared to higher-end suburbs, where the average vendor discount for Dalkeith, Cottesloe and Ascot is the highest at 12.9 per cent, 11.1 per cent and 10.7 per cent respectively.

Momentum Wealth managing director Damian Collins said in a balanced market the average vendor discount was 3-4 per cent, meaning Bateman was holding steady in the face of Perth’s property slump.

The average number of days a Bateman property stays on the market is 49, which is better than the Perth average of 88, and half Dalkeith’s 98 days.

Mr Collins said high-end properties typically attracted fewer buyers and in softer markets, these vendors had “to discount more to get the sale”.

“The most important thing is comparable sales, not necessarily comparable listing prices,” Mr Collins said.

Realmark Western Suburbs director Adam Gilbert said buyers still had the upper hand and those selling premium properties needed to consider true market value, not what they paid for a home.

“Sellers need to get a realistic assessment of price, meet it, go to auction or ask for offers,” he said.

First National Heron Johns licensee Jenny Gauci, who sells homes in Bateman, said properties priced realistically were selling well.

Bateman had experienced price falls, but they were not as extreme as in other suburbs because of what it had to offer.

“There is demand in Bateman for the school zone and it has good infrastructure, with two train stations and Fiona Stanley Hospital, and it is close to the freeway,” Ms Gauci said.

“The median price is affordable and it is at those homes where there is a lot more competition where we’re achieving better results.”

Tarryn and Jarrad Carlsen started their property search in Booragoon, but bought in Bateman because of the prices and proximity to schools and the freeway.

“We were looking for something we could move into without too much effort, but that had potential for renovations,” Mrs Carlsen said.

After researching prices and allowing for renovations, the Carlsens set a maximum of $750,000, a figure they felt was realistic in the current market.

“We looked at other homes that were perfectly maintained and renovated, but were quite a bit more expensive,” Mrs Carlsen said.

Town of Cambridge Town Scheme Amendment 31 rejected by Planning Minister Donna Faragher

JOHN Day has supported Planning Minister Donna Faragher’s decision to reject Town of Cambridge Town Scheme Amendment 31.

Mr Day was the previous planning minister who made changes to the Amendment in April before the portfolio was passed to Ms Faragher , who said she had the benefit of further discussions with the Town.

Mr Day’s version of the controversial proposal included split coding to enable multi-dwellings up to R30 within 400m of local centres, allowance of two dwellings on corner blocks 900sq m or above in City Beach and Floreat, and Cambridge Street lots to be split-coded R40/R60 to allow for multiple dwellings.

The changes were to be advertised to the public this week.

“(Ms Faragher) has had the responsibility for dealing with Amendment 31 over the last six months and the benefit of further discussions, including with the Town of Cambridge,’ Mr Day said.

“I have full confidence in the decision she has made with all of the advice available to her.”

Ms Faragher announced her decision yesterday after meeting with Town representatives on August 11 and receiving further advice from the Planning Department.

“I have decided against progressing with Amendment 31 in its current form as the eventual outcome is unlikely to be one that would be supported,” she said.

Mayor Keri Shannon said Ms Faragher’s decision would have been “a relief for many” and met with the popping of champagne corks.

However, not everyone supported Ms Faragher’s decision.

Shelter WA spokesman Stephen Hall issued a statement saying the decision was “diametrically opposed to the planning principles already adopted by the WA Government in Directions 2031 and the State Planning Strategy”.

“The State Government has set diversity and infill targets for each local government, which this scheme amendment by the Town of Cambridge seeks to address,” he said.

“The proposed scheme amendment promotes infill and diversity at an appropriate level in Cambridge.

“The failure to approve this scheme amendment perpetuates the NIMBY (Not in my backyard) mentality that has plagued WA planning system for many years.”

Mr Day and Ms Faragher encouraged the Town to progress with planning changes that would allow for more housing diversity.

It is understood the Town has already engaged consultants to commence a strategy that would address the aims of the amendment in a different way.