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How infrastructure effects property values

Written on the 26 February 2016 by James Cagney

You have to follow the infrastructure to be able to predict where the growth in house prices is going to be over the next few years. As Tom Cruise said in in the movie Jerry Maguire "Show me the money".

Once you know where the money is and estimate where the properties are in the "Property Cycle and Cycle of Market emotions" model you will be in a better position to determine where to invest your hard earned money.

There are four key drivers for property growth:

(1) Employment

(2) Affordability

(3) Population Growth

(4) Rental Yields

New jobs create confidence in a region. What is evident is that State Governments are selling assets to finance infrastructure. Nationally we have around 100 approved projects each over $500 million. Of the 100 projects Queensland has more than any other state i.e. 41 major infrastructure projects. What good news for Queensland. Over half of these projects are going to be in the South East Queensland triangle i.e. Sunshine coast in the North, Toowoomba in the West and the Gold Coast in the South.  Brisbane will be a major beneficiary of the huge infrastructure spend and the future growth of South East Queensland (SEQ). The SEQ Triangle has approximately 60% of Queensland's population right now and about 75% of the money on infrastructure will be spent in the region.

This will not please the voters in the regional areas in Queensland. One of my clients maintains you should  invest in suburbs / areas that have predicted marginal seats for the next election. The main political parties and politicians will be "giving away the farm" and promising employment, infrastructure and prosperity for the area during their election campaigns. If they don't deliver on their promises they are unlikely to win the next election. So I expect the Labour party in Queensland to direct more of the money planned on infrastructure for SEQ to these marginal seats in Queensland. It is called self preservation and politicians are seasoned at this.

Whatever they decide to spend the money in Queensland  inter-state migration will follow. This will bring welcome relief to investors who have experienced lower rental yields over the past two years.

I will reveal more information and give you my predictions for 2016 in the next "Property Update".  I will give you a summary and comment further on  what the property experts predict for 2016. I will cover Sydney, Melbourne, Tasmania, South Australia, Canberra, Perth and Darwin over the next few updates. This is not an easy task because the opinions of the property guru's are poles apart. The next "Property Update" on Sydney and Melbourne will be emailed to you by end February 2016. You are going to be surprised by some of the areas predicted to take a big tumble and those that will boom in 2016 so ................ "watch this space".

If you would like specific research on the capitals and towns in each of the State and Territories  around Australia click>>>> HERE

DISCLAIMER

Please note that the information herein is of a general nature only and is not intended as formal  advice for any particular person or entity. The contents of this Property Update has been prepared without taking into account the objectives, financial situation or needs of any particular individual.   Information herein includes material obtained from third parties considered to be reliable. Whilst this information has been diligently compiled, no warranty or promise as to its correctness is made or intended. Investors should undertake independent research to satisfy themselves that any details herein are true and correct. In addition, no predictions have been made about an individual's potential profit, loss, capital gains or rental returns.

You should not act solely on the basis of the material contained in this Property Update for your investment strategies. Changes in government policy and legislation occur frequently and without prior notice and financial markets are unpredictable.


Author: James Cagney
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