Will new units next door increase of the price of your house?

In the cities of Australia, the push is to build more apartments and townhouses. But what effect will the new developments have on the price of a house nearby?

Angie Zigomanis at BIS Shrapnel said that development often brings benefits to citizens and to support property prices in the long term.

"If the new development is taking place next to where yes, it will have an impact in the short term, as a prospective buyer may be less willing to bid up the price for your property."

"But on the other hand, when the area rezoned for development of apartments, which produces detached house taken from stocks and this increases their scarcity value is left."

Will new units next door increase of the price of your house?

Zigomanis showed no positive effect on many people move to your town because they can provide the critical mass needed for a better service.

The relationship between population density and lifestyle outcomes outlined in a recent study by Mark McCrindle Research for Urban Taskforce. It was found that the Sydney suburb with a high population density are also rated highly in urban living index, which measures factors such as walkability, proximity to jobs, restaurants and cafes and public transport.

Urban Living Index    Population Density
Crows Nest       Haymarket
Surry Hills    Potts Point
Pyrmont       Pyrmont
Marrickville       Parramatta
Potts Point       North Sydney
North Sydney    Darlinghurst
Randwick    Kirribilli
Chatswood Waterloo
Leichhardt       Double Bay
Kirribilli Homebush

The other upside for property owners is that buying from developers adds to demand for a location, the which can have a positive impacts on land prices.

This phenomenon is evident in the latest Victorian Valuer General's report, the which shows house prices typically fared better in the council areas with the greatest numbers of apartments built.

Most new units 2010-14     House price growth 2010-14
City of Melbourne               14.8%
Stonnington 30.0%
Port Phillip                          24.4%
Yarra    15.7%
Boroondara    17.9%
Moreland    6.8%
Darebin    12.9%
Whitehorse       16.2%
Metro average    11.1%

Increased unit development in the inner and middle rings of Australia’s cities is a trend which has been building for a decade and is unlikely to slow anytime soon, with the number of new units approved outstripping houses for the first time ever this year.

“As Australian cities grow larger, it is becoming more difficult to live on the outer fringes far away from work. With Generation Ys used to the idea of urban living and being close to work, leading to greater demand for all types of property in established suburbs,” Zigomanis says.