From Mosques to McDonalds, there's no evidence of a price impact

A pleasantly surprising thing happened this week in Bendigo. The local newspaper door-knocked the East Bendigo area where a mosque is proposed and couldn’t find anyone who had a problem with it.

Usually there’s nothing that brings out the NIMBY instincts of local residents like the prospect of a mosque in the neighbourhood.

All manner of proposals - including bulky goods stores, fast food restaurants, wind farms, detention centres, affordable housing and anything above two storeys in height - inspire banner wavers and letter-writers. But for hysteria potential there’s nothing to compete with an Islamic prayer centre, which allegedly has the ability to send social problems through the roof and property values through the floor.

So the calm reaction of Bendigo reaction was a breath of fresh rational air. Nobody saw the end of life as they know it and nobody claimed the value of the family home would be decimated.

The most common outcry of any opponent to a proposed development is the negative impact on property prices. No one, and I do mean no one, has ever produced any research evidence that construction of a McDonalds outlet or a place of worship or any other imagined horror hurts local values. This is because there is no such evidence. Indeed, the available research tends to contradict the notion.

As one example, Australia’s biggest mosque has a highly visible presence in the middle of Lakemba in Sydney. Lakemba’s median house price rose 11% in the past 12 months and has averaged growth of 8% per year since 2008. The suburb’s median unit price increased 10% in the past year and has averaged 10% per year for the past five years.

That’s among the best growth records in Sydney. On that evidence, you could argue that a major centre for Islamic worship helps boost local property values.

But here’s a perhaps more definitive response to those who see real estate disaster whenever something they don’t like is proposed for their little patch of paradise. This relates to the often-expressed anti views about downmarket housing projects.

Here’s what one objector to an “affordable housing project” wrote: “We find the thought of affordable housing and the type of people it will attract quite sickening. Whether we like it or not, it is a proven fact that once these types of buildings are erected, problems arise in the neighbourhood and large blocks of units become ghettos or slums …”

The objection went on at some length about the detrimental impact on the neighbourhood and of course property vales from allowing “society's lowest of the low” to be accommodated nearby. There would be an epidemic of crime, anti-social behaviour and long-term dole bludging, among other evils. Such developments were deemed to degrade the status and value of neighbouring properties.

This stereotype of “affordable housing” development and its occupants was studied at the University of NSW. After comprehensive research into such developments in Queensland, NSW and Victoria, the study confirmed a body of evidence by international researchers who found no basis for this fear.

Instead the report Understanding and addressing community opposition to affordable housing development: 2013 concluded that affordable housing developments had minimal impact on property values - or none at all.

A prime example of a positive result on property values was a small development in the relatively affluent Brisbane suburb of West End.

The 11 one and two room studio units were completed in 2004 by BHC Ltd. The study found that proximity to the project had “a positive impact on property sales values. The closer you were to this development, the more your property grew in value.

The result was “in direct contrast to a common concern in community opposition to affordable housing developments; that proximity to such developments would diminish local property values.”

The positive findings don’t mean that the development directly increased the value of other properties. The usual factors which affect property values in general - access to public amenities, transport or water – were considered far more important than proximity to affordable housing.

But likewise, when any negative impact on property values was found in the study, the researchers concluded that these kinds of “contextual factors” were “likely to have been more influential” than the presence of the affordable housing project.


Terry Ryder is the founder of hotspotting.com.au and you can contact Terry via email or on Twitter.

Terry Ryder

Terry Ryder

Terry Ryder is the founder of hotspotting.com.au.

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