UNDERESTIMATE THE VALUE OF GREENSPACE AT YOUR OWN PERIL
AUSTRALIA’S PROPERTY MARKET APPEARS TO BE LOSING A LITTLE STEAM AS PRICE GROWTH BEGINS TO SLOW – BUT THE ‘BOOM TIME’ IS NOT OVER YET
JUST 1.2 PER CENT OF RENTAL PROPERTIES IN AUSTRALIA ARE AFFORDABLE FOR MINIMUM WAGE EARNERS, ANALYSIS FINDS
SYDNEY’S 8.5% QUARTERLY HOUSE PRICE RISE LARGEST IN THREE DECADES
FEATURE ARTICLE
UNDERESTIMATE THE VALUE OF GREENSPACE AT YOUR OWN PERIL
Whilst the intrinsic value of living near natural lifestyle amenities such as parks and outdoor recreational facilities has never been understated, just how much of a correlation can be seen between the proximity of these greenspaces and an area’s property prices?
Given the lasting impacts of the COVID-19 pandemic, where many Australians opted for a sea-change or tree-change, or simply to upgrade to a larger suburban home from the city centres, a higher value has never been placed on an individual’s neighbourhood.
In line with Earth Day 2021, CoreLogic committed its resources to explore the correlation between these two factors, with significant analysis into Sydney’s property market in their latest “Property & Greenspace” report.
Parks Victoria conducted a similar study in the year 2013, where it was found that if a property was located directly adjacent to a park in metropolitan Melbourne, the value of the home increased by approximately 5-7% on average. Another similar study was conducted by Mcintosh in Perth in 2014, which heralded almost identical results.
Corelogic’s Head of Research, Tim Lawless, stated that “Our case study revealed a positive correlation between housing values and greenspace, however the correlation across the broad Sydney region was not strong, implying a lot of other factors are involved in determining the value of a residential property.”
In a wildly different environment to some of the world’s other major capital cities, approximately half of Sydney is made up of greenspace (46%), including a number of popular parks, gardens, bushland, and other outdoor recreational facilities, which draws a stark comparison to cities such as Amsterdam, where just 13% of the city is made up of greenspace.
It has been hypothesised that given the 46% greenspace coverage throughout the city, its wide availability has diminished the direct effect it has on property values. Lawless stated, “This indicates residents and authorities may place more value on greenspace where it’s less accessible.”
Although this doesn’t mean that the correlation is insignificant for the city, as Lawless explains “we can see a clearer relationship between private greenspace and housing price premiums .” In the more densely populated areas of Sydney, such as the Eastern suburbs, there was found to be a far stronger correlation between private greenspace and surrounding property prices. Greenspaces in these areas were seen to increase prices by around 26.6% for houses, and 20.6% for units, showcasing their true value when scarcely available.
Highest Proportion of Private Green Space
As the urbanisation of Australia’s cities continues to become more prominent in coming years, it is likely that the impact of these greenspaces will become more significant for property prices. Furthermore, changes to the environment could push the envelope further, “As Australia’s climate change strategies and domestic policy evolve over the years ahead, the market’s readiness to value ‘greenness’ as a tangible property feature may strengthen,” Lawless explained.
Whilst we don’t have a crystal ball to predict how property prices will change into the future, these aforementioned factors suggest that whilst greenspace does have a small to medium impact on property prices at the present time, this impact is likely to grow exponentially, and therefore an investment in a property near to such amenities should see growth supported in such a manner.
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