The Coalition has won its third consecutive term in NSW government, led by its first female elected Premier, Gladys Berejiklian. The Coalition win has been largely welcomed by property investors, due to two key policies, which while not directly impacting property, are underlying drivers for market performance over the longer-term in Sydney.
Transport infrastructure in Sydney’s growing west
Transport was a key theme in Premier Berejiklian’s pre-election promises, with the announcement of new key transport projects set to directly benefit Sydney’s western suburbs.
In recent times, a large part of NSW’s infrastructure planning has been guided by the Greater Sydney Commission’s Three Cities Strategy, which delivers concentrated benefits to the Sydney’s West and South-West regions to support the Western Sydney Airport planned to open in 2026.
One of the main election promises was the delivery of the Metro West project — a new rail line from Parramatta to the CBD which is expected to commence construction in 2020 and cost $18 billion in total.
The Government also promised additional Metro rail routes which are expected to commence planning over the next four years. They include:
- Westmead to Western Sydney Airport
- St Mary’s to Rouse Hill
- Western Sydney Aerotropolis to Macarthur, and
- Bankstown to Liverpool.
Future Metro routes
Image source: Liberals NSW
Roads were another key spending area, with commitments to upgrade arterial roads such as the M5 through Sydney’s South-West and the M4 to Sydney’s west.
Outside the west, the Government also promised to start building the Northern Beaches tunnel (now known as Beaches Link) in 2020. The $14 billion Beaches Link project is a proposed tunnel linking the Northern Beaches to the Warringah Freeway and south across the harbour the Western Harbour Tunnel to Westconnex.
According to the NSW Government, the Northern Beaches Tunnel will reduce travel time by:
- 41 minutes: Dee Why to Sydney Airport
- 27 minutes: Brookvale to the CBD, and
- 13 minutes: Olympic Park to North Sydney.
Beaches Link entry and exit points
Image source: ABC.net.au
Construction of the Beaches Link is expected to begin in 2020, however this is still subject to planning approvals as well as finalisation of financing and procurement arrangements.
Economy and Budget
Prior to the election, the State Pre-Election Budget release showed positive signs despite house price pullbacks in Sydney.
Projections from the NSW Treasury showed that the 2019 financial year state budget would be in surplus by $846 million.
Future forecasted surpluses for the State are expected to average around $1.3 billion over the next four years.
The NSW Treasury expects state economic growth to trend at 2.5% annually over the following three years.
The jobs market is expected to remain healthy buoyed by infrastructure spending. NSW Treasury modelling released in March 2019 showed that public infrastructure spending will support more than 100,000 direct and indirect NSW jobs each year over the next four years, translating to 400,000 jobs to 2023.
The unemployment rate was 4.1%, corresponding to a seasonally adjusted unemployment rate of 3.9% – the best result in more than 4 decades.
NSW’s net worth remains the highest of any state or territory in Australia. The state’s net worth is projected to grow to $312.3 billion by June 2022.
According to the latest CommSec State of the States report (released January 2019), NSW is now tied with VIC as the best performing state economy.
The NSW economy has benefited from solid population growth and strong job markets which helped to drive retail spending and business investment.
“Sydney property prices continue to be a major point of concern for many investors, yet the NSW economy remains strong, jobs growth is healthy, and the State Government is continuing its commitment to deliver the infrastructure needed to support rapid population growth along Sydney’s west, South- and North-west,” said Ironfish Head of Property William Mitchell.
“The Sydney market is currently being impacted by affordability and access to credit off the back of the recent credit crunch. When access to credit and wages growth improves, this is when we would expect affordability to improve and when we’d see a more buoyant market.”
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