{"id":187558,"date":"2025-05-22T15:30:28","date_gmt":"2025-05-22T05:30:28","guid":{"rendered":"https:\/\/propertyupdate.com.au\/?p=187558"},"modified":"2025-05-19T08:58:06","modified_gmt":"2025-05-18T22:58:06","slug":"the-long-term-future-of-property-how-will-it-impact-investors","status":"publish","type":"post","link":"https:\/\/propertyupdate.com.au\/the-long-term-future-of-property-how-will-it-impact-investors\/","title":{"rendered":"The long-term future of property: How will it impact investors?"},"content":{"rendered":"

Australia is likely heading for a federal election in May 2025, and as always,\u00a0housing affordability<\/em>\u00a0will be a major talking point.<\/p>\n

Sadly, these discussions often end up more about rhetoric than effective policy change.<\/p>\n

However, at some point, a solution will have to be found.<\/p>\n

For property investors, who typically hold assets for decades, it\u2019s important to consider how potential government actions and interventions could impact long-term property returns.<\/p>\n

\"Property<\/p>\n

The government is rewarded for not taking meaningful action<\/span><\/h2>\n

A few years ago, I\u00a0wrote a blog<\/a>\u00a0discussing how all three levels of government heavily rely on the property market for tax revenue.<\/p>\n

For example, government taxes and charges are estimated to account for around 30% of the cost of new housing.<\/p>\n

Stamp duty and land tax account for between one-third to half of all state tax revenues.<\/p>\n

The property market is an important source of tax revenue and rising property prices tend to translate into rising tax revenue.<\/p>\n

This means they have a vested interest in not making housing more affordable. If they could magically solve the housing affordability issue overnight, it would probably result in a significant loss of tax revenue.<\/p>\n

With this in mind, we need to question how committed any government truly is to fixing the housing affordability issue.<\/p>\n

Setting aside this vested interest, there have been several proposed solutions, and it\u2019s important to consider how these might affect property investors.<\/p>\n

Will \u2018activity centres\u2019 work?<\/span><\/h2>\n

The Victorian government has announced plans for 50 high-density \u201cactivity centres\u201d across Melbourne, with the first 25 already identified.<\/p>\n

These centres will be strategically located near train and tram stations, mostly in the city\u2019s south-east, with the goal of delivering over 300,000 new homes by 2051.

<\/div><\/p>\n

In 2018, Sydney implemented a similar urban planning initiative, designating 15 Urban Renewal Corridors for revitalisation. This plan aims to accommodate 725,000 new homes by 2038.<\/p>\n

The overarching goal of these urban strategies is to increase housing density in areas already serviced by public transport, featuring a mix of mid-rise (10 to 20 stories) and low-rise (4 or fewer stories) apartment buildings.<\/p>\n

Impact of higher density on property values<\/span><\/h2>\n

Peter Tulip, a former economist at the Reserve Bank of Australia, has spent much of his career studying property price behaviour.<\/p>\n

In a\u00a0recent\u00a0<\/a>paper<\/a>, Tulip and his colleagues looked at the effects of high-rise developments in Sydney suburbs such as Chatswood, Forest Lodge and Green Square.<\/p>\n

They found that property prices in these areas closely followed the trends of nearby suburbs, both before and after the developments, showing no significant negative impact on the neighbourhood\u2019s amenities.<\/p>\n

This suggests that concerns about tall apartment buildings harming the character of local areas are often exaggerated.<\/p>\n

Tulip argues that there\u2019s no empirical evidence to support the idea that development reduces the quality or character of neighbourhoods.<\/p>\n

In fact, he believes higher-density development can foster economic growth and enhance local amenities without significantly affecting property values.<\/p>\n

Based on this research, it seems clear that increasing density likely won\u2019t harm property values.<\/p>\n

In fact, it could even improve the overall amenity of an area.<\/p>\n

However, it\u2019s important not to jump to conclusions.<\/p>\n

While the potential for redevelopment in established suburbs can increase the land\u2019s productive value, leading to some price appreciation for property owners, not every case may play out this way.<\/p>\n

I\u2019ve heard stories of property owners holding unrealistic expectations, hoping to sell to a developer for more than what is financially viable.<\/p>\n

When this happens, they often get stuck in a stalemate, and no development happens at all.<\/p>\n

So, while there\u2019s potential for growth, don\u2019t assume it\u2019s a guaranteed win for everyone involved.<\/p>\n

\"Property\"<\/p>\n

Just build more homes!<\/span><\/h2>\n

The only real solution to housing affordability is to increase the supply of housing. While increasing density in established suburbs can help, it has its limits.<\/p>\n

Given Australia\u2019s vast landmass, we could expand urban sprawl and build more low-density homes.<\/p>\n

However, the challenge lies in building the necessary infrastructure to support this growth in a timely and cost-effective way, requiring significant investment.<\/p>\n

While this approach is feasible for most capital cities, Sydney faces unique constraints due to its geography, with water and national parks limiting expansion.<\/p>\n

As a result, Sydney will be forced to focus on increasing density, which will, in turn, raise the productive value of land.<\/p>\n

While increasing housing supply could, in theory, slow property price growth in established suburbs, this depends on adequate infrastructure being in place.<\/p>\n

If new housing is not supported by sufficient infrastructure, the appeal of living further from the CBD will be diminished due to longer travel times and congestion.<\/p>\n

In that scenario, properties closer to the CBD will continue to command a premium.<\/p>\n

How will robo-taxis impact property prices?<\/span><\/h2>\n

At a recent event, Tesla unveiled its Cybercab and Optimus robot, products that could soon revolutionise how we travel, offering comfort without the stress of traffic.<\/p>\n

Driverless rideshare services like Waymo One are already operating in some cities in California, and it\u2019s likely that driverless taxis and rideshares will arrive in Australia sooner than we think.<\/p>\n

This raises an important question: how will this affect property values? \r\n

<\/div><\/p>\n

Would you mind a 1.5-hour commute if you could use that time to work or relax?<\/p>\n

While it\u2019s too early to say how this will impact property values, it\u2019s worth noting that the tyranny of distance may become less of an issue.<\/p>\n

However, inner-city, blue-chip locations offer more than just proximity.<\/p>\n

They provide a unique vibe, community, and culture that many people value.<\/p>\n

There\u2019s little bad news for property investors<\/span><\/h2>\n

Australia will need to increase density in its capital cities to accommodate our growing population.<\/p>\n

This is an irrefutable necessity.<\/p>\n

However, there will almost certainly be opposition, so the extent of additional housing is uncertain.<\/p>\n

That said, evidence suggests this is unlikely to negatively impact existing property values.<\/p>\n

In fact, it\u2019s likely to contribute towards property price growth.<\/p>\n

We can build more homes and expand our already sprawling capital cities, but travel times and congestion will become a bigger issue as we\u2019re simply not building enough infrastructure fast enough.<\/p>\n

While technology may offer some relief, living close to the CBD will still be in high demand in the decades to come.<\/p>\n

In summary, I believe this is good news for long-term owners of investment-grade property.<\/p>\n

That is,\u00a0high-quality<\/em>\u00a0property will continue to command a premium.<\/p>\n

<\/div>\r\n
<\/div>\n","protected":false},"excerpt":{"rendered":"

Australia is likely heading for a federal election in May 2025, and as always,\u00a0housing affordability\u00a0will be a major talking point. Sadly, these discussions often end up more about rhetoric than effective policy change. However, at some point, a solution will have to be found. For property investors, who typically hold assets for decades, it\u2019s important…<\/p>\n","protected":false},"author":9,"featured_media":149111,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[54,3],"tags":[],"class_list":["post-187558","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-property-updates","category-property-investment"],"acf":[],"yoast_head":"\nThe long-term future of property: How will it impact investors?<\/title>\n<meta name=\"description\" content=\"Australia is likely heading for a federal election in May 2025, and as always,\u00a0housing affordability\u00a0will be a major talking point. 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