It has long been a popular belief among property investors that a large concentration of housing commission in an area will negatively affect private housing prices. Only now has this belief actually been confirmed.
Wanting to investigate whether a high proportion of public housing in an area could indeed affect property values, buyer advocacy company Secret Agent recently did a study of a public housing estate in Richmond, a suburb west of the Melbourne CBD.
Richmond was chosen because it had a high density of public housing within a confined area. The estate itself spanned an entire block.
Collecting property price data between 2008 and 2012, Secret Agent focused on all property sales that had occurred within a 400m radius of the Richmond estate.
They discovered a general trend of increasing median house prices as the distance from the Richmond Housing Commission increased.
The average increase was $72,104 for every 100m a sale was from the estate.
Delving further, Secret Agent divided the data into two groups, one measuring sales within the first 200m of the estate and one within the next 200m.
Arranging price data this way, it was found that the average price of houses in the first group was less than the second group, where the sales had been located further away from housing commission.
Further studies were done in Flemington and North Melbourne, which showed similar findings.