Australian Railway Suburbs P: (07) 3370 1702 E: [email protected] Real Estate Analysis June Quarter 2013
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PRDnationwide Research Report Prepared by PRDnationwide Research. For further details contact: Aaron Maskrey, Residential Research Director Australian Railway Suburbs P: (07) 3370 1702 E: [email protected] Real Estate Analysis June Quarter 2013 1 Table of Contents Introduction & Methodology 3 Key Findings 4 Sydney Railway Suburbs, New South Wales 5 Sydney Railway Localities Overview 6 Sydney Individual Railway Localities Overview 7 Sydney Railway Localities Summary Table 9 Melbourne Railway Suburbs, Victoria 10 Melbourne Railway Localities Overview 11 Melbourne Individual Railway Localities Overview 12 Melbourne Railway Localities Summary Table 14 Brisbane Railway Suburbs, Queensland 15 Brisbane Railway Localities Overview 16 Brisbane Individual Railway Localities Overview 17 Brisbane Railway Localities Summary Table 19 Perth Railway Suburbs, Western Australia 20 Perth Railway Localities Overview 21 Perth Individual Railway Localities Overview 22 Perth Railway Localities Summary Table 24 Disclaimer 25 2 Introduction & Methodology • Most capital cities offer several options of public transportation, but railways are a common option of transportation that is shared across the majority of Australian state capital cities. Sydney and Brisbane may utilise their waterways extensively through ferry transport, while Melbourne and Perth do not offer such an extensive ferry service. Instead, Melbourne operates a thorough light rail network and while the trams manoeuvre through the city in their own lanes, they are not as rapid as trains. All capital cities make use of buses, in which some cities might have bus ways, but the majority of bus transportation across the cities are through use of shared roads which overall tend to get congested through overuse in peak hour. • The aim of this research is to ascertain the difference of property returns from a location within walking distance to a railway station and localities that are of farther distance and do not rely immediately on the use of railways. • The research analyses railway localities that are outside of the central business district (CBD) as this is seen as the main centre for employment. While some localities analysed in the research are specifically catered to an automobile free resident (such as TODs) other locations analysed are considered to be typical outer suburban areas, where residents utilise a reliable and rapid railway network. • A true transit orientated development (TOD) will make use of several alternatives of public transport, one of which will almost certainly be rail. TOD’s are a mixed use location (containing employment nodes) surrounded by medium/high density residential, is pedestrian and cycle friendly, and provides high quality transit options. • The analysis excludes a radius (either 2.5 or 5 kilometres) around the capital cities CBD. Dwellings considered to be within a railway locality in • The research attempts to cluster railway and non-railway localities into comparable regions to determine the greater trends this analysis are within a suburb that contains a railway station. Non- that have occurred over the past decade. These regions may be broken up through natural or man made barriers which are railway localities are classified as suburbs that do not contain a railway easily identifiable (such as large reserves, highways or main roads). station. Dependant on the city analysed, the catchment area for this research varies between 15 kilometres to 20 kilometres. • The historical property analysis conducted in this report takes house and unit sales from 2003 onwards and groups the transactions into 6 monthly periods to ensure the sample sizes are large enough to produce justifiable medians. Sale data is • A mitigating factor of this research may be the park and ride residents up to the most recent period of February 2013, while rental data used is from the most recent quarter ending March 2013. who use railways, but live outside the railway suburb. This variable is acknowledged, but excluded in the analysis as it is perceived that • Median rental data and yields used in this report have been based on the configuration of a 3-bed house or 2-bed unit as residents who desire to use railways as a method of transportation will standard. seek a dwelling within walking distance before searching for a dwelling • Data analysed in this report is sourced from Price Finder, RP Data, RTA, DHS, and REIWA. that requires use of an automobile. In addition, park and ride residents may drive for large distances, often bypassing several railway stations to secure a non-fee car park as close to the city as possible. 3 Key Findings RAILWAY SUBURBS OVERVIEW INVESTMENT OUTLOOK Sydney’s railway suburbs return higher rental yields for both house and unit due The analysis has revealed that in this low vacancy market, typically units located to the lower median prices for railway suburbs city-wide. within railway suburbs provide better investment opportunities through stronger Melbourne’s median house price is, on average 10.9 per cent higher in railway yields. Observing the macro trends on median price growth also shows that suburbs, remarkably greater than non-railway houses. there is little divergence between median price growth of railway and non- Brisbane’s Southern railway suburbs have experienced considerable growth in railway suburbs. the housing market, inline with maintaining the most affordable median price at $459,000. Sydney- Railway suburbs provide a great investment option with an affordable Perth’s Inner 10km railway suburbs experienced a positive divergence in both median price, low vacancy rate of 1.7 per cent, and overall strong rental market. house and unit markets over the past two years. The analysis shows better yields being achieved in railway suburbs than non- railway suburbs. NON-RAILWAY SUBRBS OVERVIEW Melbourne- Houses located in railway suburbs have consistently maintained a higher median price threshold (at an average 10.9 per cent) than non-railway Sydney’s non-railway suburbs have consistently outperformed the railway suburbs. Currently the market is transitioning through its stock on the market, localities in median price in both houses and units. with the highest vacancy rate (at 2.7 per cent) of any capital city analysed. This Melbourne’s non-railway suburbs were outperformed by railway localities, due has resulted in comparably lower yields for would be investors. by and large to a far greater number of sales occurring in railway localities. Brisbane’s mixture of public transport options has resulted in minimal Brisbane- Units provide a stronger investment option in Brisbane through differences recorded amongst rail and non-rail areas, though sales in railway higher yields. It is no surprise to find the vast majority of units located within areas have performed better than non-railway. railway suburbs. Through the analysis, it was established that there was no Non-railway suburbs in Perth have recorded a higher median price as well as a significant price growth difference between railway and non-railway suburbs. larger volume of transactions when compared to railway suburbs. Perth- An extremely tight rental market has led to high yields, with unit stock just edging ahead over houses for the most appealing investment type. Through the analysis, it was established that there was no significant price growth difference between railway and non-railway suburbs. 4 Sydney Railway Suburbs, New South Wales Description of Sydney’s railway regions which have been analysed: • The North region of Sydney is defined by suburbs north of the Parramatta River and to the left of Middle Harbour, stretching out to as far north as the Asquith Railway Station. This region services to four railway lines, including Hornsby, Carlingford, Berowra, and Macquarie Park. • The Inner West region takes suburbs located south of the Parramatta River and through to Strathfield. The furthest west railway station analysed within this region was the Flemington Railway Station. As an inner city area, there are six major lines which all have stops within this region analysed. • The Outer West region analyses suburbs located south of the Parramatta River and west of Rockwood. The furthest west railway station analysed within this study was the Parramatta Railway Station. Four railway lines were included in this region, analysing the Glenfield, Schofields, Richmond, and Penrith lines. • The South region analyses suburbs located south of Strathfield through to the Georges River. The furthest south railway station analysed within this study was the Woolooware station. Three main railway lines were included in this region, analysing the Cronulla, Macarthur/Revesby, and the Glenfield lines. Analysis from the rental data provided from the aforementioned regions resulted in the following key findings: • Sydney remains an attractive destination for investment property with the residential market delivering high rental yields and low vacancy rates. Railway suburbs in Sydney while notoriously less desirable in terms of median price provide for the most part greater yields for rental returns suggesting investment in railway suburbs while sometimes uninviting, do provide the thrifty investor greater returns. • The Sydney unit rental market recognises railway outperforms non-railway localities by 0.5 per cent with an average city-wide rental yield of 4.6 per cent. This being said, non-railway localities provide an 18 per cent increase on median price suggesting the less desirable