How Water Trading Boosts Aussie House Prices

Parking in major cities in Australia is an exercise in futility.

Especially in cities like Melbourne and Sydney, where it feels like half the streets are closed as part of the infrastructure boom taking place right now.

The Herald Sun noted in early September that illegal parking in City of Melbourne has skyrocketed over the past two years. The city council receives an average of 20 complaints per day.

According to real estate guru and Cycles, Trends and Forecasts editor Phil Anderson, the parking problem is actually part of the real estate cycle.

Inner-city development in Melbourne is placing more pressure on street parking. Or what Phil says is the ‘economic rent’ unfolding right before our eyes.

Economic rent refers to a process in which the private sector bids up the price of land values, creating recurring property cycles in turn.

Parking in the cities — or even in your own street — was a given. However, as land prices increase, the cost of the parking space does too.

Melbourne City council data shows that revenue from residential parking permits has ballooned by 86% in the past five years. And new permits aren’t available for residents in new buildings that are under construction.

In addition to this, local councillors have begun lobbying politicians for federal funding to finance a wishlist of infrastructure projects.

At the top of the list is a Tullamarine airport rail link straight into the Melbourne CBD. Interestingly, councillors haven’t picked a particular route for the proposed rail link.

Instead, they’ve left the door open for planners to create a route that would benefit residents in the Western suburbs of Melbourne.

There’s a reason why.

The Victorian state government is keen to develop the Western suburbs, with key infrastructure projects that would ultimately boost land values.

One of those projects is an urban redevelopment project at the Maribyrnong Defence site.

There’s also a push from officials for a freight train line that would reduce truck traffic in Melbourne’s west. Added to that is an energy project which includes proposals for a solar powered ‘mini grid’, on top of a waste-to-energy facility.

Don’t expect these projects to get the green light overnight.

Should they get the federal funding and go-ahead, the ‘value’ of the projects will go where it always does: straight into an increase in price of land in the surrounding area.

Whether it be car parking or a refurbishment of an old urban site, the important thing to note is how these projects slowly increase land values.

But, more importantly, they are all part of the broader Australian real estate cycle, according to Phil.

Pointing out that major infrastructure projects boost land values is common sense. However, small developments also have a way of boosting land values, says Phil.

In the not-too-distant future, some residents may be able to make a little cash on the side by trading rainwater in Fishermans Bend, a suburb in Melbourne.

Fishermans Bend was rezoned from an industrial site to an urban one. The 485 hectare plot lies six kilometres from the Melbourne CBD, and is currently Australia’s largest urban renewal program.

Conservatives estimates suggest that, in 30 years, this district will be home to around 80,000 people.

The water trading concept

South East Water in Victoria is introducing a water-saving idea for the Fishermans Bend development. It wants apartment dwellers to ‘trade’ unused rainwater from rooftop tanks. Giving future residents a financial incentive to less water.

Have a look at how they think it could work:

Water-saving idea 18-9-17

Source: The Age
[Click to enlarge]

The ‘rainwater micro-trading’ concept has never been tried in Australia before. However, the plan is for it to mimic solar energy systems some homes in Australia already use. That is, households that have solar panels installed, and which feed unused energy back into the grid, get a rebate on energy bills.

Well, South East Water reckons their rainwater micro-trading concept can do the same thing.

In order for it to work, the water trading plan calls for each apartment to have a quota of free rainwater from the communal tank. The unused part of the quota could be traded to other residents for a reduced water bill.

It’s only been in recent years that local councils have insisted on new housing builds to their own rainwater tank. Fishermans Bend will be the same. Every single residential building in the suburb must have a rooftop water tank.

The tanks aren’t just for water, though. They also will also capture storm water, which should limit the risk of flooding from heavy rain.

These small steps are how land price builds up in a city.

More people, higher density, innovation and new technology…and up goes the land price.

It also keeps the real estate cycle going.

Based on Phil’s extensive research of market cycles over the course of centuries, Phil says the current real estate cycle has another nine years to run. And clever infrastructure investments are only going to drive land values higher along the way.

To learn how you can use the real estate cycle to your advantage today, click here.

Kind regards,

Shae Russell,
Editor, Markets & Money

Shae Russell started out in financial markets more than a decade ago. Working with a derivative brokering firm, she helped clients understand derivative markets, as well as teaching them the basics of technical analysis. Since joining Port Phillip Publishing eight years ago, Shae has worked across a number of publications. She holds the record for the highest-returning stock recommendation, in which a microcap stock returned over 1,200% in six months. Ask her about it, and she won’t stop yapping on. For the past two years, Shae has worked alongside Jim Rickards as his Australian analyst, translating global macro trends for Aussie investors, and how they can take advantage of these trends. Drawing on her extensive experience, Shae is the lead editor of Markets & Money. Each day, Shae looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.

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