Infrastructure boom setting up a property boom: HotSpotting's Terry Ryder

Infrastructure spending is always a key driver of growth in residential property markets and government plans to fast-track shovel-ready projects will enhance the established trend of rising markets in many parts of Australia.

 

That’s why we created a new report titled “Australia’s Infrastructure-led Property Boom: National Top 10 Hotspots”.

 

The research conducted daily by the Hotspotting team places considerable emphasis on infrastructure.

 

The best places to invest have impact from infrastructure in two key ways: excellent existing infrastructure (public transport, schools, medical services, retail outlets, etc) and spending on new infrastructure.

 

New infrastructure is particularly influential on generating growth in residential property markets. Our belief is that no other factor impacts property markets as strongly as major new infrastructure spending.

 

Infrastructure such as new motorways, rail links, hospitals and universities improve the amenity and desirability of the locations directly impacted.

 

These projects generate major economic activity and employment – and from that flows demand for real estate.

 

From 2013 to 2017 both Sydney and Melbourne had significant real estate booms, but this was not replicated in other parts of Australia. During that period, the markets in Perth and Darwin were in reverse, and those in Brisbane, Adelaide and Canberra were largely stagnating.

 

The fundamental difference was the infrastructure spend. Both Sydney and Melbourne were spending tens of billions of dollars on new infrastructure. As a consequence, the economies of the two biggest cities were strong, as a time when the other cities were weak or in decline.

 

We have seen major infrastructure spending transform local economies and their property markets in many significant regional cities across Australia. Projects totalling more than $20 billion have transformed the Sunshine Coast from a tourist town to an international city and it currently has one of the strongest property markets anywhere in Australia.

 

Newcastle, Geelong and Wollongong are all regional cities which have transitioned by older-style economies based on manufacturing to prosperous modern economies through spending on new infrastructure and the generation of new employment sectors. Growth property markets have emerged from the transition in these places.

 

The recent Federal Budget provided evidence that the Australian Government intends the past-pandemic economic recovery to be largely inspired by spending on major projects across the nation. It’s also clear that State Governments are ramping up their spending on roads, rail links and other projects to generate jobs.

 

In the new National Top 10 report we highlight ten locations which are poised for growth as a result of big spending on new infrastructure. They include some locations which might now normally blip on the radar screens of property investors, like Toowoomba in Queensland.

 

More potential hotspots will emerge as governments firm up their plans and announce start dates for major developments.