Expert Bust #14 – Infrastructure Influence

I had a client who was planning to buy in a suburb where a new business park would create 500 jobs.

I calculated the population within a 40-minute commute. I then estimated the unemployment rate for that area.

There were literally thousands of potential job applicants who had no incentive to move one inch. And if they did move, they had a choice of at least half a dozen suburbs right next door to this new business centre.

Back in the resources boom there were plans to spend $90 billion on infrastructure in Gladstone, a city with a population of only 30k. You’d think that’s a big enough project to drive demand. But because every developer and their ‘cus new about it, there was over-supply and prices actually tanked despite the projects going ahead.

Small infrastructure projects aren’t enough to shift the needle and big ones are too well-known to escape the attention of developers. Badgery’s Creek is a good example – loads of vacant land being developed and promoted.

If an infrastructure project is going to impact prices, it will start to show up in supply and demand metrics anyway.