Show notes – The Impact of Infrastructure on Property Values & Choosing Between Melbourne and Brisbane for Your Next Investment (Ep. 280)

Episode Highlights

0.55 – Dave kicks off today’s episode with two great listener questions for the team to dissect.

9.15 – What rapid changes impact property prices? And how do transport links affect this?

11.00 – What premiums will buyers pay for an easy PT commute?

17.00 – What are the likely impacts of higher density hubs in designated locations?

26.48 – Next week’s teaser: The complexities of Loan to Value Ratios

27.26 – Hunter’s question: If you had $500,000 to invest, where would you invest, Melbourne or Brisbane? And what about $1,000,000?

51.43 – Gold Nuggets

Show notes

Listener Question 1: Marilyn’s Inquiry on the Melbourne Suburban Rail Loop

Marilyn’s question revolves around the ongoing civil works on Melbourne’s Suburban Rail Loop and how it might influence surrounding property markets. As Melbourne’s most ambitious public infrastructure project to date, the rail loop is set to drastically reshape the city’s transport landscape.

Melbourne’s Rail System Shortfalls

Dave explains that the existing rail system has been unable to meet the growing needs of Melbourne’s population, particularly in middle and outer suburbs. Current lines force commuters to travel into the CBD to transfer to another line, causing congestion and inefficiencies. The new rail loop aims to alleviate this, connecting suburbs without the need to pass through the city center. He emphasizes:

• Accessibility: The new stations will make it easier to navigate Melbourne, enhancing suburb-to-suburb connectivity.
• The Price Tag: “It is the most expensive infrastructure project in Australian history,” Dave points out, bringing to light the scale and financial implications of this initiative.

Town Planning and Property Impacts

Mike explores the potential influence of the suburban rail loop on different types of properties, particularly around the 1.6-kilometer radius of new stations. He raises important questions around town planning initiatives that will likely accompany the new transport hubs, such as:

• Higher Density Housing: The Victorian government’s plan to increase housing density around new stations will bring more residents into previously quieter suburban areas.
• Property Genres: Mike notes that apartments and townhouses may see increased competition due to new developments, while standalone homes on large blocks could become more valuable due to their scarcity.

Business and Service Demand

Dave adds another layer to the conversation by considering the impact of increased population density on local businesses. As more people move into areas around the rail loop:

• Business Growth: There will be greater demand for services, which could lead to the gentrification of these areas, attracting cafes, shops, and essential services.
• Suburban Commercial Hubs: He suggests that these rail-connected suburbs could transform into vibrant commercial centers, with employment hubs providing both local jobs and increased property values.

Listener Question 2: Hunter’s Investment Dilemma – Melbourne or Brisbane?

Hunter asks a classic investor question: “Where would you invest $500K or $1M—Melbourne or Brisbane?” The team takes on this challenge by weighing the current and future prospects of both cities, while highlighting the importance of a personal property strategy.

Dave on Melbourne’s Property Cycle

Dave dives into the property cycles of each city, explaining that Melbourne is likely nearer to the bottom of its cycle, presenting a prime opportunity for capital growth over the next few years. He discusses:

• The Post-COVID Market: Melbourne’s property market took a hit during COVID-19 lockdowns, but as the city rebounds and infrastructure projects like the rail loop come into play, prices are set to rise.
• The Advantage of Buying at the Bottom: Dave explains that purchasing close to the bottom of the property cycle can yield significant returns over the first five to ten years, particularly in areas set to benefit from infrastructure developments.

Mike on Brisbane’s Market Appeal

Mike turns the spotlight to Brisbane, noting that while Melbourne’s growth may lie ahead, Brisbane has been a favorite among investors in recent years. With the 2032 Olympics on the horizon, Brisbane’s infrastructure is rapidly developing, and population growth continues to fuel the demand for property. Key points include:

• Proximity to the River and City: Mike advises that if you’re buying in Brisbane, focusing on properties near the river or within a few kilometers of the CBD is critical for ensuring capital growth.
• Land-to-Asset Ratio: Houses, rather than units, hold more value in Brisbane’s market due to their higher land-to-asset ratio, offering better long-term returns.

Cate’s Take: Where to Invest $500K in Melbourne

Cate offers her insights on what $500K can buy in Melbourne’s current market. She highlights:

• Inner-Ring Units: For those with a $500K budget, Cate suggests targeting inner-ring suburbs like Yarraville, Footscray, or Newport. Older, boutique-style apartments in small blocks, particularly from the 1960s and 1970s, have strong growth potential due to their scarcity and character.
• Regional Options: Cate also mentions regional Victoria, where $500K can stretch further. Locations like Ballarat offer detached houses with capital growth potential and strong yields.

Cate’s Million-Dollar Melbourne Picks

With a $1M budget, Cate shifts focus to more established areas:

• Period Homes: She recommends targeting smaller Victorian single-front homes in gentrifying suburbs like Newport, Footscray, and Flemington. These properties are scarce and in high demand, which ensures long-term growth.
• Middle-Ring Suburbs: For a larger property or more land, middle-ring suburbs like Glenroy or Sunshine are worth considering. These areas are benefitting from infrastructure growth, and with a $1M budget, buyers can secure a three-bedroom home.

Gold Nuggets:

Mike Mortlock’s gold nugget: The strategy is more important than the hotspot!

Cate Bakos’s gold nugget: Rail amenity counts for a lot. What are our town planners thinking, and how is rail infrastructure playing a key role in our growing population threat to traffic congestion?