The impact of infrastructure: Property investing isn't a short-term bet

GUEST OBSERVATION

Infrastructure has an incredible impact on property prices.

Take for example, the M7 motorway in Sydney.

There are now some fantastic areas that you can get to quickly on the M7, meaning people can buy a brand new or high quality home in an area with very easy access to all the necessary amenities.

As a result of this infrastructure being built, many people who would have previously described these areas as too remote or hard to get to are now considering them to be desirable locations to live.

It’s important not to forget that both new and established infrastructure has an impact upon property prices.

While there’s been a lot of speculation in the media about the impact of major infrastructure projects in capital cities such as Melbourne and Sydney, many other regions in Australia already have infrastructure in place to rival that planned by these respective state governments.

In my experience, many speculators miss out on capital growth as they’re effectively placing a bet that planned infrastructure will cause a short-term price movement.

The reality is that infrastructure is often the first step in the gentrification of an area and the resulting price movement in the suburb may take months or even years to be fully felt.

Regardless of your intentions when entering the property market, I believe every buyer should be focused on the long-term capital growth they’re able to achieve from their property purchase.

Too often I see short-term speculators abandoning a purchase which is likely to experience strong growth over the next ten years, because the price dropped slightly over the past two months.

Charles Tarbey is chairman and owner of Century 21 Australasia.