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Budget provides boost for real estate markets

May 29, 2018

The commitment of a massive $75 billion for significant rail and public transport infrastructure over the next decade in the recent Federal Budget will be good news for real estate markets across Australia.

History regularly shows that new infrastructure projects boost local economies by creating new jobs and attracting more residents to a suburb, town or region. In turn, this additional demand can push up property values.

Pleasingly, given the tendency of politicians to announce a new road, traffic overpass or even a second Sydney Airport numerous times, the latest budget includes $24.5 billion for new projects.

The Minister for Infrastructure and Transport, the Hon Michael McCormack MP, said this massive infrastructure spend “demonstrates a commitment to a credible, decade-long pipeline of infrastructure projects focused on driving economic growth, increasing productivity and connectivity and creating new employment opportunities. Our pipeline will create approximately 50,000 additional direct and indirect jobs over the next decade.[i]” Furthermore, the commitment to infrastructure augurs well for homeowners and investors with exposure to the infrastructure hot spots. 

Massive capital city wins

The Budget has committed up to $5 billion for construction of a rail link to the Melbourne Airport, which is overdue, $1.1 billion for further components of Perth's METRONET rail program, $400 million to duplicate a section of the Port Botany Rail Line and construct the Cabramatta passing loop. The upgrade of the Beerburrum to Nambour Line, which will be excellent for real estate values on Queensland’s Sunshine Coast will receive $390 million in Commonwealth funding.

Other big-ticket items include $300 million for the Brisbane Metro project and $220 million for the electrification of the Gawler Line in northern Adelaide. This investment should be a boon for values in Gawler, Two Wells, Wynn Vale, Willaston, Salisbury Park and Balaklava. This region is serviced by Raine & Horne Gawler and Raine & Horne Two Wells.

The bush wins too

The May Budget continues a commitment to building a strong regional Australia with extensions to community grants programs to invest directly in economic and social infrastructure. This will create jobs and stronger local communities. It won’t hurt regional real estate values either.

A major highlight in NSW, for example, is the $971 million investment in the Coffs Harbour Bypass. My colleague Christine Clarke at Raine & Horne Coffs Harbour tells me the local community has been lobbying for this bypass for many decades. Now the commitment has been made, Christine is confident the bypass will boost real estate values in the famous holiday town.

There’s also $3.3 billion for continued upgrades to the Bruce Highway, while suburbs around Bunbury 175 kilometres south of the state capital, Perth are sure to benefit from the $560 million to be invested in stage 2 and 3 of the Bunbury Outer Ring Road project.

Given the correlation between infrastructure spending and real estate values, property investors would do well to take an active interest in reviewing the Federal Budget’s commitment to infrastructure, and the suburbs and regional centres it will impact. Please review the 2018-19 Budget’s transport infrastructure announcements here.


[i] http://minister.infrastructure.gov.au/mccormack/releases/2018/may/budget-infra_01-2018.aspx