Looking for the next property hotspot or suburbs that are set to experience high growth?
Speak to any seasoned investor and they will tell you to look for areas that are benefiting from infrastructure spending - specifically improved transport links. This could be access to a new motorway, rail link or bus route.
With this in mind, we wanted to investigate the impact of the new $8.3 billion Sydney Northwest Metro on the surrounding suburbs and their property markets. Here we are talking broadly about the Hills District and suburbs that include Castle Hill, Kellyville, Bella Vista and Rouse Hill.
If the Northwest is not on your property investment radar then this article will also help you understand the potential opportunities available in this region.
But let's start by understanding the link between transport infrastructure and property prices.
Does transport infrastructure influence property prices?
Transport infrastructure - specifically public transport - is definitely a factor in the 'liveability' of an area, and is one of 19 indicators - that includes access to employment, schools and green areas - that Domain's Liveable Sydney study uses to rank suburbs.
But there have also been numerous academic studies that have examined the link between public transport infrastructure and residential property values, including one on the Northwest Metro. These unanimously agree that rail links have the potential to increase connectivity, accessibility, livability, commuting times, and even house prices.
"Numerous academic studies unanimously agree that rail links have the potential to increase connectivity, accessibility, livability, commuting times, and even house prices"
The authors of the Northwest Metro study noted that, "Due especially to the punctuality, speed and low emissions of rail transit systems, the land and residential property values around rail stations has been found repeatedly to significantly increase, particularly near the entrance and exit points to the station".
The paper did note that property prices are, 'influenced by many factors', so purely attributing it to a rail link could be simplistic and misleading. They also pointed out that property prices did also vary at different stages of this project, actually dropping when it was first announced, but rising after construction commenced and finished.
Let's now look at the Sydney Northwest Metro project and area it services.
Sydney Northwest Metro
The new Sydney Metro Northwest train line opened to the public on May 26 after the construction stage started in 2013.
The light rail is significant in that it now provides suburbs in this area with direct rail links to Sydney CBD. Previously residents here would only have been able to catch buses in terms of public transport.
The most obvious benefit of this rail link is the opportunity it gives people to access jobs in or near the CBD, or at a stop enroute - such as Chatswood. It also opens the potential for rail connections to other points serviced by Sydney Metro's network via interchanges at Chatswood and Epping.
One should also not overlook the fact commuters on a rail link are not in a car clogging up a road, as parts of the Hills Shire are notorious for traffic congestion.
So what about property prices?
Property prices then and now
With headlines like, 'House prices boom in suburbs along Metro Northwest train line' and 'How the new metro is recharging Sydney', it would appear that property prices are on the up in the suburbs adjacent to the line.
But how true is this, and how much have they grown in real terms? The only way to know is to look at the data.
"Data from SQM Research shows that Bella Vista is the standout performer, posting growth of +70.59% over the last decade."
Data from SQM Research, based on their weekly asking prices index, shows that Bella Vista - the site of a new station - is the standout performer in this area, posting growth of +86.1% over the last seven years.
Castle Hill, another site of a major new station on the line, has posted growth of +71.52% between February 2013 - just before major construction of the metro commenced - and February 2020.
|Suburb||Feb 2013||Feb 2020||% growth|
Source: SQM Research, Weekly Asking Property Prices Index
What do local real estate agents think?
For agent Jay Bacani of Manor Real Estate (Baulkham Hills) the arrival of the Metro Line has been positive, "I think the news of the Metro Line coming - even during the time when it was being built - definitely had an effect."
"Since then there's obviously been a lot more demand in areas that have the new Metro Line. We have had increased interest coming from areas like Parramatta and the city, buying property in suburbs with access to the Metro Line - especially those within a 1km radius. I think the whole Hills District has benefited because it's attracted a lot of buyers in the area."
"According to real estate agent Shiv Nair, suburbs like Glenwood have seen a jump of up to +10% in house prices since the Sydney metro first started service in mid 2019"
"The Metro Line has brought a lot more people to our suburbs who weren't previously looking here because of the lack of connectivity to the city. Properties here are also selling faster, and the DOM (days on market) has been in the region of 1-2 weeks over the last 3-4 months."
Nair believes the area is proving more popular with investors, "The area is definitely more lucrative now for investors because of the new transport options. The metro really helped increase the value of homes here within the last 6 months. I see it happening - more and more people are looking to buy within the area now".
Meanwhile, other agents in the area have also reported, "an increase in buyer confidence".
Future transport hotspots
If you have an eye on the future, then you should know there are a host of new rail projects in the pipeline across the country. This includes:
- Upgrades to the T3 Bankstown Line between Sydenham and Bankstown, due for completion by 2024
- 12km Parramatta light rail, connecting Westmead to Carlingford via Parramatta, due for completion in 2023
- Melbourne Metro, two 9km tunnels due for completion in 2025
- 7km Gold Coast light rail extension to Burleigh Heads, due for completion in 2023