But government promises to build a six-lane highway, a railway station or a hospital does not automatically mean the surrounding area has just become bargain territory over which you should swoop.
The idea such multi-million-dollar improvements must supercharge home prices is based on the false premise that government investment is the most important thing affecting price growth. But it is not.
Instead, changing demographics are a much more powerful indicator.
Property prices increase where people want to live. As an investor, you want to operate in areas where residents enjoy stable employment and wages growth.
This attracts affluent buyers who are prepared to pay increasing amounts to live in the area. And the inability of local supply to meet this demand underpins any rise in property values.
If new amenities such as a light rail system or a school attract affluent buyers, that’s excellent news. But it’s the demography change that creates high rental income and decides the capital growth of an investment property.
Experienced investors will research the demographic trends and consider how they might be affected by any new infrastructure project.
A new university will bring students, lecturers and those who provide services. A hospital, on the other hand, may serve only those who live in the area. Any new employment would likely be insufficient to have an impact on property prices.
As an experienced local agent, I have worked with many investors with long-term strategies.
Together, we look at the potential market for tenants as well as the prospects for capital growth. Consideration is given to any promised government project for the area, but only in the context of the demand it might generate for local housing.
Here are some basic guidelines for investing in areas with promised improvements to services.