Do property values generally go up when a newer suburb/area if developed adjacent?

Hi mixedup,

  I'd say Yes, but with caveats (below)…..   Your comment re infrastructure is a good one, and an area can/will usually grow in value as the amenities grow. 

  The caveats that I believe will affect the actual result are these:-

1.  IF the new subdivision is taking hold, selling well, with not too much discounting, and prices sold in each stage are ticking up a few $k each time, then "Yes, the adjacent suburb will be a beneficiary".

2.  Any change may not be immediate, but will take hold over a few years – especially as the new suburb becomes "older" and the location is better in that original suburb.  They don't say "Location, location, location" for nothing…. 

3.  Of course, if the whole area (city?) is booming, then the rising tide will lift all boats anyway.

4.  As the infrastructure progresses, this becomes a "rising tide" too – all for the good.

5.  Land sizes will have an effect over time too – many new subdivisions are on "pocket handkerchiefs", leaving the older suburb with more value as the new properties age.

Benny

I can only talk from personal experience. I have two properties in the ACT that both have had a lot of new housing go up in adjacent suburbs.

3 bedroom, 1996 built, small block house. The property has dropped in value, because it's a small block and all the new properties are also on small, or similar blocks, people are able to get brand new houses for around the same price. In 2010, the house was valued at $420k, when the new houses were built they were selling for $400k! This meant that the house is now down to about $380k.

4 bedroom, 2001 built, largish block house. The property has increased in value, because it's a top of the line 4-bedroom house on a reasonably sized block… ie it has some grass. It has gone up in value because all the houses in the next suburb have almost no space on a 4-bedroom house. They also sell for closer to $650k-$800k for a similar sized house (200m2 living area). The house went from $550k to $620k in the last 12 months.

Not sure if that helps too much, but in general if the new suburb is selling new houses of the same size etc at a noticeably higher price then it will lift prices. Conversely, if they are selling similar houses for a lower price, then it will drop the price.