Driving up property prices around new light rail a key measure of success for NSW government

Driving up property prices in suburbs along the new Sydney light rail corridor is a key measure of success for the state government, documents have revealed.

An increase in property values adjacent to the CBD and South East Light Rail corridor has been listed as a key performance indicator for Transport for NSW.

The success of the $2.1 billion development will be evaluated, in part, by whether the suburbs of Surry Hills, Randwick, Kensington and Kingsford, see higher price growth than the rest of the city’s south east. The light rail corridor is due to start operating in 2019.

The KPI has been slammed by shadow treasurer Ryan Park, who said increasing property prices should not be a key objective for a government infrastructure project.

“I don’t think the community would expect the government to measure the success of a project by how much it drives up property prices,” he said.

“Whether people are actually utilising the infrastructure you put in … what it means for the road network, what it means for business, these are the KPIs people expect the government to have,” he added. “Not for them to be worried about getting an increase in house prices.”

Reducing commuter journey times and pressure on roads as well as increasing light rail patronage and jobs along the corridor, are also among 13 KPIs listed in the CBD and South East Light Rail – Benefits Realisation Plan, obtained by the opposition, under government information access laws.

Property prices would be reviewed one year, five years and 15 years on from the opening of the 12-kilometre light rail route from Circular Quay to Kingsford and Randwick, according to an April 2015 update to the document.

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Minister for Transport and Infrastructure Andrew Constance said the government prioritised investment in infrastructure that delivered economic and social benefits for the people of NSW.

“We expect any new infrastructure to act as a catalyst for other investment across commercial and private property. This is the kind of flow-on effect we want our $73 billion infrastructure program to create – to generate even more jobs and to revitalise communities.”

When asked if increasing property prices was still a KPI, a Transport for NSW spokesperson said they would continue to monitor property values along the corridor after the project is complete.

While Mr Park said it wasn’t necessarily a bad thing for homeowners to benefit from an increase in their property’s value, it should not be a focus of the government.

“I imagine young people struggling to get into the housing market would be pretty annoyed if they thought the government was patting themselves on the back for increasing property prices.”

Mr Park said it was unfair that while residents of the eastern suburbs would see their properties benefit from government-funded light rail, property owners in other areas might have to help pay for their infrastructure upgrades.

A billion dollars in funding has been set aside by the state government for stage one of the Parramatta Light Rail, which is expected to cost $2.2 billion.

To help plug the gap the government is looking to a special infrastructure contribution, previously put at $200 per square metre for new residential developments along the light rail route, which has sparked concern developers would pass this on to buyers.

“We don’t want a tale of two cities, where those in the west, many of who are already paying to travel longer distances and have longer commuting times … have to pay even more than those in the east, who have better access to infrastructure and shorter commuting times,” Mr Park said.

While value capture was not considered for the CBD and South East Light Rail project, which is being managed by private entity ALTRAC, the Tansport for NSW spokesperson said a special infrastructure contribution was one of a range of funding sources being considered for the Parramatta Light Rail.

“The Parramatta Light Rail corridor will activate priority growth areas and there is an opportunity for the government to share in the growth in value that will occur along the route,” the spokesperson said.

“The NSW government is finalising options for these contributions and how they can be applied.”

While neither Mr Constance or Transport for NSW would comment as to whether there were or would be similar KPIs in place for the Parramatta Light Rail, a leaked cabinet-in-confidence document from April acknowledged the light rail would generate uplift for properties surrounding stations in western Sydney.

It flagged a large increase in housing supply would be required to keep the market price at an affordable level as property prices were most likely to go upwards and would crowd out low income households.