Rail Line Case Study: How The New Mernda Rail Line In Melbourne’s North Boosted Land Prices

Fortunes were made across the wild west of the USA back in the 1800’s, as businesses like the Union Pacific Rail Road opened up the country by laying tracks, connecting existing towns and laying the infrastructure for new towns along the way. When the railroad came to town, there was a bump in property and land prices as the new infrastructure brought in more opportunity to trade, more people and the prospect of more prosperity for the town.

The practice continues to hold true today, as evidenced recently in Melbourne’s outer northern suburb of Mernda, when property and land prices surged after tracks were laid. With the first passengers set to board from the $600 million Mernda station next month, some of those passengers who own property locally will not just be benefiting from the new link into the Malborne CBD, but will also be enjoying a 25% growth in the median house price in the past year, taking it to $575,000.

Those who had invested in Mernda land have enjoyed substantial gains this past year also, with some parcels having been resold for more than double their purchase price. A 252 square metre block was sold in March for $300,00 that was purchased 11 months earlier for $140,000.

Mernda has outpaced the other neighbouring areas of Wollert and Kalkallo due to the new rail station being the biggest driver of buyer confidence along with road upgrades and schools. Local agents are reporting new enquiries about the area begin with, “How far is it from the new train station?”.

University of Melbourne planning expert Matthew Palm suggests that, “The rule of thumb is a proper rail system will increase property values on average between eight and 15 per cent.”

Mr Thomas said property prices in Mernda did not start to pick up until the first sleepers were laid, partly because people were sceptical about whether the project would go ahead.

“Battle-weary investors and landowners have heard it all before and it’s not until they see something material that it seems to have an effect on the market,” he said. “The announcements are one thing, but the actual turning of soil is an important factor.”

It remans to be seen what the effects will be of the recent announcements from the Victorian government and their plans for a new airport link, new Metro Tunnel and the oppositions plan to extend the Frankston line.

The million-dollar question for property investors remains which plans will go ahead as Victoria head to the polls later this year. However, we do know with Melbourne’s rapidly growing population more rail expansion will be needed, so it’s a great opportunity to at least begin the research into what might happen.

You don’t have to just invest in Melbourne’s new rail networks either, as there are rail projects planned for all the major capitals.  If you are time poor, and don’t have the time to research all the rail line opportunities– be sure to contact the team here at Plan Assist to do the property investing research and leg work for you.

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