Developers should consider funding transport infrastructure as an essential component of new estates, enabling them to charge a higher price for housing product, according to a Perth property observer.
The call stems from fresh research released by analytics firm PropertyESP, which showed residential developments near transport infrastructure were experiencing higher capital growth than ‘stranded’ suburbs.
PropertyESP evaluated 24,386 sales in those suburbs, from 1994 onwards, with the research showing price growth in Cockburn Central, Atwell and Success – all suburbs in close proximity to the Perth to Mandurah train line – has significantly outstripped that experienced in Ellenbrook since 2007.
The data showed all of the suburbs experienced similar house price growth until 2007, at which time Ellenbrook prices flattened out, while the other suburbs continued on an upward trajectory.
All of Atwell, Cockburn Central, and Success experienced median price rises from around $450,000 in 2007 to just less than $550,000 at the end of 2014.
At the same time, Ellenbrook median house prices were largely steady, increasing from around $400,000 in 2007 to around $420,000 at the end of 2014.
Vacant land prices told a similar story, with all of the suburbs peaking in 2007, but Atwell, Cockburn Central and Success all exhibiting higher trajectories of growth than empty lots in Ellenbrook.
The data also showed that apartments in Cockburn commanded a premium, on average, of $50,000 over the same type of product in Ellenbrook.
“The Ellenbrooks of this world are going to miss out in terms of property growth if they don’t lobby for infrastructure or look at a JV kind of scenario,” Ms Reece told Business News.
“There have been continued land releases and continued sales at Ellenbrook, which have been good, but the values have not been growing at the same rate as areas where they have got that kind of infrastructure.”
Ms Reece said developers and local governments needed to continue to lobby state and federal governments for more transport networks, in light of the capital growth seen in property close to that infrastructure.
“Any kind of infrastructure of that nature will have an impact on property prices,” she said.
“What’s interesting at Cockburn Central is that only 56 per cent of the people that live there actually own their property, so it’s a hive for investors as well.”
And if state and federal governments aren’t willing to step up to fund the infrastructure, Ms Reece said she was of the opinion that a developer needed to be really innovative and fund the linkages themselves.
“Someone has to take leadership and that’s what we typically rely in the state government to do,” she said.
“But developers need to recognise that if they work with governments and put this type of infrastructure where the developments are occurring, there will be gains, and they can put their prices up.
“If you look at Alkimos with their solar batteries, there are examples where companies are showing leadership.
“Transport is an area where whoever is the first cab off the rank in terms of showing leadership will benefit.
“Then what will happen, just like Satterley when he used to put in schools and shopping centres in at the early stages, which became the norm.
“What we’re looking for is a developer who will actually put transport in; then that will become the norm.”