Motorways boost property values
Large-scale motorway extensions have economic benefits, and can boost property values for nearby homeowners, too. Miriam Bell reports.
Improving commute times for suburbs and towns further out from a region’s centre makes those areas more accessible and desirable to live in.
It seems logical the increased appeal would result in a rise in the value of land and existing properties in those areas. But the equation is hard to quantify, particularly when a market has been through a boom, as New Zealand’s just has.
JLL strategic consultancy cohead Jonathan Mann says every important land-use study concludes that improving transport connectivity has a positive impact on the value of the land, although the estimates of how much vary.
A 2016 Danish study, which involved 250,000 houses, found a major highway development boosted prices by about 5% in the run-up to the opening, and then by 2.5% to 4.3% in the years following, and Mann says that seems like a good benchmark.
A 2018 Auckland Council study found that properties within a 500m catchment of rapid-transit networks would sell for more because of access to faster public transport, illustrating the positive impact of improved connectivity on property values, which is a theme across all the research.
With Transmission Gully, it is difficult to isolate its impact on property values because of the length of time involved in its development, Mann says. Connecting Wellington’s CBD with the Ka¯ piti Coast, Transmission Gully was proposed more than 100 years ago and launched in 2014. It opened in March.
But Bayleys national director of projects Suzie Wigglesworth says that at its northern end, residential property values have more than doubled during the past five years. ‘‘The region has experienced growth well above average as buyers have anticipated the impact of Transmission Gully . . . It’s a pretty clear example of transitoriented development pushing property prices upward, which has knock-on effects for regional employment and economic growth.’’
She says there is plenty of evidence of transport infrastructure boosting values. In Auckland, the northern motorway extension and western line rail upgrades cumulatively delivered more than $3 billion in benefits almost exclusively to private landholders.
When motorway extensions into more rural areas are announced, it affects the value of farmland in the area first, she says. ‘‘Landowners can apply for residential zoning for pieces of that land, which unlocks it for development. Once that happens its value goes up, and then the value of existing houses in the area goes up, too.
‘‘There is more value uplift as the motorway upgrade is completed, commute times are reduced, and more people are attracted to the area.’’
Wigglesworth points to Te Kauwhata in north Waikato and Millwater in north Auckland as areas where motorway development has led to housing development, and population and property value increases. Another example is Warkworth, north of Auckland, which is already seeing benefits from work on the Ara Tu¯ hono – Pu¯ hoi to Warkworth motorway, set for completion this year.
Ray White Warkworth principal Terrence Banks says housing demand in Warkworth and nearby towns, such as Leigh and Snells Beach, has surged during the past two years.
The search for affordable housing and a post-Covid urban drift north are contributing to this, but the motorway extension is a significant factor, he says.
‘‘It will provide an easy, stress-free arterial route back into the centre of Auckland and makes Warkworth a satellite suburb.’’
The broader market slowdown does not seem to be affecting Warkworth and there is ongoing interest in the new subdivisions under way, he says.
‘‘The motorway unlocks formerly rural land to be developed for housing, and this provides more affordable options for people who can’t afford the prices in suburbs closer to the centre of Auckland.
‘‘But it also has benefits for the existing community . . . [with] improved amenities and business opportunities.’’
The positive trend will continue, Banks says. ‘‘We have big box retailers, such as Pak'nSave and the Warehouse,
moving in now, and they have done their research. They don’t go to areas where growth is not expected.’’
While most homeowners can expect benefits from motorway development, there can be negative impacts. Mann says properties that are right next to a new motorway are exposed to increased noise and vibration, and decreased air quality, which can reduce a property’s value. ‘‘It means a homeowner wants to be far enough away from the motorway so it doesn’t have a negative effect, but close enough to get a benefit.’’
It is likely a sweet spot can be found, Mann adds. The
Auckland Council study suggests the maximum price premium for properties close to rapid-transit stations came at around 260m away, for example.
Areas that are bypassed by motorway changes can also experience some detriment. Businesses might suffer because of a reduction in through-traffic and related income – although that is not always the case.
But AUT construction professor John Tookey says the reality is that the rolling out of efficient transport infrastructure drives the development of cities.
‘‘A good motorway system allows people to commute from outer areas more easily, so you end up with satellite suburbs and towns.’’