It is well known that property location is fundamental to driving real estate prices. Understanding the proximity of property to key amenity and public transport infrastructure has a significant outcome on the price people are prepared to pay for good real estate. But how much is it actually worth to be within walking distance of a park or a train station?Geographical Information Systems (GIS) technology allows us to analyse patterns and trends in real estate data when we map these transactions in both time and space. It then becomes possible to see just how far the halo effect of open space on price extends. We can quantify the impact of being within walking distance of a tram stop or a principle train line or multiple cafes.
The harder the data, the bigger the picture
In our growing cities, people are now more likely to pay a premium to live closer to public transport, retail hubs and amenities. But being able to turn that into a map gives people the ability to quantify where amenities and infrastructure fit into the picture. And if you quantify things, then it has much more value to the client than effectively someone saying, ‘yeah, it seems like it’s about five per cent.’
Infrastructure adds extra layer of heat to inner city premiums
Developers and real estate agents tend to report transactions by suburb, but they also work in inner, middle and outer ‘rings’, where the closer to the city you are, the higher the premium is for property. But not all suburbs are serviced by public transport equally. For example, in Melbourne, the inner city suburb of Richmond is served by multiple forms of public transport – aside from several tram and bus lines, the area has four train stations, meaning from an asset perspective, it’s incredibly rich in existing infrastructure. Compare this to other suburbs that are a similar distance from the CBD suburbs like Brunswick, or Fitzroy, or Moonee Ponds that might have one or two railway stations. Richmond is extremely well served, as a gateway into the city.
In the last 10 years, the City of Melbourne resident population has more than doubled to around 120,000 people. Government forecasts of population growth predict this population could increase almost four-fold to reach around 430,000 people by 2056. As Melbourne’s population growth continues at the rate it is moving at the moment, which is seeing an influx of something like 1,200 new people in a week (80,000 to 100,000 a year), the growth and the demand for public transport and housing will only become stronger.
Perth case study: Gosnells, Huntingdale and Thornlie
The developer community is really interested in understanding this premium. What is open space proximity worth? What is accessibility to public transport worth? Really, how much is it worth for my site? This is where the Urbis GIS team can get ‘hyperlocal’.
Urbis recently provided visual data on the outer south-eastern Perth suburbs of Gosnells, Huntingdale and Thornlie to inform market outlooks for a client. Using construction date and sale price information from RPData – which drills right down to provide the details at an individual lot level – allowed the GIS team to create an index as to whether the price that it was sold for was higher or lower than the median sale price for that suburb in that year. This visualisation highlights where a premium was being paid for property. The housing construction date allowed the team to create a map which clearly shows where the wave of developments in the area over time from the establishment of these suburbs prior to 1960 up to the present day.
Gosnells, Huntingdale & Thornlie: Dwellings by age of housing stock[/caption]By starting to quantify the attractiveness that people are prepared to pay for proximity to certain services, you can identify that there’s a premium here on being close to public transport – in this case, Gosnells station. Equally, there are certain premiums with regard to proximity in certain open space assets. So the closer you are to open space – there’s a premium being paid for either being close to open space or close to a view.
The data also showed that the age of the stock around the Thornlie area tended to be homogenous, consisting of houses built between 1970 and 1990. House prices were deemed ‘hot’ for property closer to infrastructure and amenities such as schools and open spaces like parks. However, near the train stations, the properties are much more heterogeneous in construction dates, but the hot spots signal a higher premium paid for these house sales that occurred around transport nodes.
These maps give the client the ability to understand the history of a location’s housing construction, how people have either knocked down or rebuilt, or whether they’re investing in their house and against the attractiveness of the premium that people are willing to pay to be in close proximity to either public transport or to open space.
Over a long period of time, you get a sense of the value of proximity to geography, and how the value decays with distance from an asset. For example, within 200 metres of an asset, there’s a premium being paid and the further out you go, that premium decays quickly, so you are able to quantify just how influential infrastructure is in determining house prices.
Alistair Towers, National GIS Manager, Urbis
Alistair has twenty years international experience working with GIS technology. During this time, he has gathered practical experience in all aspects of spatial data creation, analysis and presentation cartography.
Alistair has previously worked for an aerial imagery company specialising in large format mapping output, the pre-eminent GIS software manufacturer in a technical sales role as well as GIS manager for a large retail consortium.