In Australia’s relentless march toward a projected population of 49 million by 2066, the nation is currently experiencing a remarkable “Infrastructure Boom”.
A collective commitment from federal, state, and local governments has unleashed an investment storm, with over A$218 billion earmarked for major public infrastructure between 2021 and 2025, according to Infrastructure Partnerships Australia.
Infrastructure investment is an important economic indicator of property market performance. The financial injection brings multifaceted benefits to both local economies and residents, including but not limited to the following:
Benefit #1: Fuelling Economic Growth
Infrastructure projects, particularly major ones, are labour-intensive endeavours. From the construction phase, which demands a sizable workforce, to the ongoing operational requirements, such as those seen with airports, universities, and hospitals, these projects have a substantial impact on job creation and local businesses.
Take, for example, the construction of Western Sydney Airport. It’s set to deliver up to 3,200 jobs during its construction phase, and once operational, it will provide 9,000 airport-related positions. According to the Western Sydney District Plan (2018), it’s projected to support a staggering 48,000 jobs by 2041, spanning various sectors, including manufacturing, retail, and professional services. Additionally, it will anchor the new Badgerys Creek Aerotropolis, ushering in opportunities in manufacturing, hospitality, tourism, and more for the local community.
Benefit #2: Enhancing Connectivity and Accessibility
Many of Australia’s current flagship projects are in the transportation sector, such as the Sydney Metro, Melbourne Metro Tunnel, North-South Corridor in Adelaide, Melbourne-Brisbane Inland Rail, and the Queensland Bruce Highway Upgrade.
These projects are transformative as they facilitate faster, safer, and more expansive travel options, especially in regional areas where services are traditionally less concentrated. Enhanced connectivity streamlines industry resources, makes jobs more accessible, and accelerates product delivery to markets, resulting in increased productivity and overall economic growth.
Benefit #3: Elevating Liveability and Attractiveness
Infrastructure initiatives also play a pivotal role in bolstering a location’s attractiveness and liveability. Transport infrastructure, for instance, improves commuting efficiency, while social infrastructure enriches the daily lives of residents. Furthermore, medical infrastructure often becomes a deciding factor for individuals when choosing where to reside.
Australia’s regions stand to gain significantly from this trend, given their existing advantages in affordability and growing net internal migration. Infrastructure projects that introduce amenities the same as those in major cities raise the regions’ profiles. For example, the substantial investments pouring into major regional medical projects are enhancing liveability, creating highly skilled jobs in construction and beyond, and diversifying local economies.
These infrastructure developments, catalysing economic growth, job creation, and improved liveability, are some of the key drivers in stimulating demand and influencing property market dynamics. Now, let’s explore three regions reaping the rewards of these infrastructure investments.
Gympie, QLD – Where Connectivity Thrives
Situated just an hour’s drive from the Sunshine Coast and slightly over two hours from Brisbane, Gympie’s property market enjoys the best of both worlds: proximity to major cities and affordability. The upgrade of the Bruce Highway, slashing travel times between Gympie and these two urban centres, has ushered in increased traffic, more businesses, greater employment opportunities, and heightened housing demand.
Gympie’s unemployment rate has dropped to the lowest point in over a decade.
As housing demand surged in response to lifestyle and affordability factors, property prices followed suit.
The rental market, too, experienced intense demand, leading to a 65% surge in rental prices over the past five years.
Port Stephens, NSW – A Hub of Opportunity
Port Stephens, with its affordable housing prices and idyllic coastal lifestyle, has drawn in residents seeking a balance between affordability and comfort. The region has also benefited from transport infrastructure improvements, such as the Pacific Motorway upgrade. However, what truly sets Port Stephens apart is its involvement in a series of infrastructure projects that are generating substantial job opportunities.
Port Stephens’ unemployment rate is now at the lowest level since 2013, and the job market is expected to stay active as the above infrastructure developments come into full swing.
While housing demand in Port Stephens has dipped slightly from its peak a year ago, it remains well above the ten-year average relative to supply, with house prices experiencing a notable 124% increase.
With a 2% vacancy rate, rental market dynamics have eased somewhat since the pandemic. The under-construction employment hubs are expected to rekindle rental growth.
Melton, VIC – Shaping a Lively Community
Melton, the newest member of Greater Melbourne’s Significant Urban Areas, is rapidly evolving from a commuter town into a fully equipped community. Major infrastructure developments have catalysed this transformation:
Melton’s unemployment rate (5.7%), though not at the low level of Greater Melbourne (3.7%), has reached its lowest point since late 2011.
The region’s housing demand, as reflected in sales volume, has seen a consistent uptick over the past three years. This heightened demand, coupled with a diminishing supply, has driven house prices upward in 2021-22.
In the rental market, vacancy rates have plummeted to a decade-low, resulting in robust rental growth over the past year, with further growth anticipated.
Gympie, Port Stephens, and Melton exemplify the profound impact of infrastructure projects on local economies and property markets. However, it’s crucial for property investors to remember that a market’s performance isn’t dictated by any single factor. Infrastructure is a potent stimulant, but it must be evaluated alongside other economic and property market indicators when making location-based investment decisions.
*This blog inspired by our Whitepaper Australia’s Infrastructure Boom. Check it out for more charts and analysis on the Infrastructure Boom!
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