Traditional funding sources are becoming inadequate to meet public transport demands in Australian cities, despite the broad economic and social benefits public transport brings, such as cost savings associated with reduced traffic congestion, productivity through improved job creation, competitiveness and livability.
In 2013 around two-thirds of Australia’s population resided in a capital city. By 2061, the Australian Bureau of Statistics forecasts this proportion will increase to 74%. This population growth is creating pressure for public transport systems and infrastructure, and governments need to find alternative funding resources.
In Australia, governments face a funding shortfall, which is compounded by limited funding resources (low taxes) and competing priorities. Unfortunately, the federal government in Australia has in some cases ceased funding public transport projects.
New financing resource
The concept of “value capture” is being explored to help fill the hole left by the Commonwealth. Value capture is the appropriation of some land value gains that result from the installation of specific public infrastructure improvements in a limited benefit area, and sees part or all of these revenues used to fund the improvements.
Before introducing value capture financing to fund public transport, we need to know the value of uplift that occurs as a result of different public transport infrastructure. To answer this question, we have been exploring how Brisbane’s ferries have influenced property values in the city.
Since four CityCat ferry systems were introduced in 1996, this influential system has grown to 23 terminals, 19 CityCats and 9 mono-hulled ferries. But what effect have they had on land values?
Many ferry-oriented developments have been built to leverage off Brisbane’s CityCats and other ferries. Land developers have paid for part or all of the construction costs for the Regatta, Hamilton Northshore and Teneriffe terminals on the Brisbane river, to ensure ferries service their developments.
The challenge was to measure the effects for these ferry-oriented development areas, to see whether developers were justified in their decisions.
What are the property value effects?
We used property data for much of Brisbane to see what impact the ferry terminals have on property values, and found property prices tended to increase for properties located closer to the ferry terminals. If you get one kilometre closer to the ferry terminal that is expected to increase the property price an average 4%, excluding other factors.
The positive effects on house prices brought about by the ferries were particularly notable at the Regatta, Bulimba and Hawthorne terminals, and to a lesser extent at Mowbray Park. This suggests the combination of suburbs with mature terminals and a decade of ferry-oriented development has positive impact on house prices or property values. There were less effects around the nearby Norman Park terminal because it is only serviced by more limited, lower-frequency cross-river services.
Unexpectedly our study found a fall in property values around the Guyatt Park terminal, but we think this may be explained by the Green Bridge opening from Fairfield to St Lucia, which broke the monopoly on student housing in St Lucia, and which was not included in our study. No property uplift effects were observed at Teneriffe and at Hamilton North Shore, where development is still immature. It is still too early to say what the impacts will be there.
The effects were more muted at locations such as West End where redevelopment opportunities have been scarce, partly due to planning controls, and at the QUT Gardens Point and University of Queensland terminals dominated by higher education land uses.
Many properties that benefited from ferry proximity were also high-rise apartments in the Brisbane central business district. Our research suggests that a one hundred metre decrease in the distance to the ferry stop would increase property values by between 4.9% and 13.1% in this location. This is a considerably stronger response than the 4% average increase across the broader study area.
Ultimately it appears property developers were justified in seeking to secure ferry terminals to service their developments. Governments may also be justified in bringing in land value capture mechanisms to help pay for terminals, vessels or operating costs in appropriate locations.