Public housing often conjures images of unsafe neighbourhoods and weak market performance. However, is this perception justified?
Junge Ma (pictured above), a senior research analyst at InvestorKit, delves into the data to explore the true impact of public housing on property market growth.
Public housing, government-subsidised rental accommodations, is designed to support individuals with low incomes or complex needs.
Ideally located near essential services like transport and health facilities, these areas aim to enhance livability – a factor that could positively influence local property markets.
Contrary to popular belief, public housing does not necessarily lead to increased crime rates.
A significant study by the NSW Department of Public Housing in 1997 stated, “neither the proportion, type, or design of public dwellings in a postcode exerts any significant independent effect on its crime rate.”
Recent data up to 2024 continued to support this finding, showing no clear correlation between public housing density and crime rates in neighborhoods.
Investigating property value growth in areas with public housing reveals surprising patterns:
Analysis shows fluctuating correlations between public housing proportions and property value growth.
In Sydney, 2021 witnessed a negative correlation, where affluent suburbs led the boom. By 2024, however, areas with higher public housing ratios saw faster growth due to affordability constraints.
Over the long term, data indicates that public housing percentages do not significantly impact house price growth, with all suburbs experiencing periods of appreciation.
In the rental sector, public housing’s impact varies.
In Sydney, 2022 data exhibited a strong negative correlation between public housing percentages and annual rental growth. However, by 2024, this correlation weakened significantly.
In contrast, Perth showed a positive long-term correlation between public housing density and rental growth, suggesting benefits from gentrification and demographic shifts in areas with substantial public housing.
Rather than avoiding investment in areas with public housing, InvestorKit data suggests these locations do not inherently pose risks to safety or property value growth.
In fact, with ongoing urban renewal and infrastructure improvements, areas with public housing might offer promising opportunities for investors.
“Public housing proportion doesn’t make a suburb unsafe, and in the long term, it won’t cause lower value growth or rental growth,” Ma said.
This insight from InvestorKit challenges the stigma associated with public housing and highlights its potential in contributing positively to neighborhood dynamics and investment portfolios.
For the full InvestorKit report, click here.
