The Australian Financial Review: East West Link hits property prices. Michael Bleby. 25 August 2014
Plans for the East West Link tunnel have pushed house prices in Melbourne’s Clifton Hill area into a decline that will take at least five years to recover from, private modelling shows.
The average property price around Alexandra Parade, the arterial road that will form the eastern mouth of the planned 4.4 kilometre tunnel, has fallen almost 11 per cent last year to $813,224 from $912,120 in 2013 and is projected to fall as low as $648,918 in 2016, a report by the Secret Agent property consultancy says. The report is based on price movements of houses in similar relative positions to the Burnley Tunnel, built in the late 1990s.
Clifton Hill prices are likely to rise sharply in 2020, towards the end of the scheduled 5-year construction period as the local market plays catch-up, jumping almost 52 per cent to $1.16 million from $761072 in 2019.
They will rise further to $1.3 million in 2021, before dropping back to $1.2 million the next year and thereafter rising gradually, the report shown to The Australian Financial Review says.
The property market has responded more quickly to planned construction of the East West Link tunnel than with the Burnley Tunnel eight years ago, says the consultancy, which compiled the figures using historical pricing data of dwellings and adjusted it for variations such as number of rooms.
The study focuses on the value of properties in relation to a venting stack, or chimney, that will be erected at the intersection of Alexandra Parade and Gold Street. This is one of two ventilation stacks planned for the tunnel – the other being at the western end in Parkville – and is likely to affect the value of dwellings within a 500-metre radius more than those slightly further away, within a 500-metre to 1-kilometre band.
During construction of the Burnley Tunnel, which connects the Westgate Freeway with the Monash Freeway, dwellings within a 500-metre radius of the ventilation stack at the eastern end of the tunnel grew more slowly than those within the adjacent 500-metre to 1-kilometre band.
Still, since the East West Link plans were published last year, there has been no such discrepancy in prices between the different areas in Clifton Hill. Properties in both bands have fluctuated equally, but this may be because work on the stack has not yet started, the report says.
“Most likely it is too early in the project’s development for any noticeable impact on house prices to be apparent,” the report says. “It is also possible that without the physical presence of the ventilation structure it is not having much of an effect yet.”