Report Summary

The Impact of Aircraft Noise on Brisbane Residential Property Sectors: 1988-2013 QUT, School of Civil Engineering and Built Environment and the Air Transport Innovation Centre (ATIC)

qut.edu.au Professor Chris Eves and Andrea Blake

Commissioned by Brisbane Airport Corporation

Main Findings TO EFFECTIVELY MANAGE FUTURE DEMAND, AN UPGRADE TO EXISTING INFRASTRUCTURE AT BRISBANE AIRPORT IS CURRENTLY UNDERWAY. ANY INCREASE IN AIRPORT INFRASTRUCTURE HAS THE POTENTIAL TO RAISE QUESTIONS ABOUT POSSIBLE IMPLICATIONS FOR RESIDENTIAL COMMUNITIES.

Over the study period 1988 to 2013, the research found the location of a property under a flight path will have minimal if any impact on the price, saleability, investment performance and capital growth of a property. Residential property value drivers, such as proximity to transport, the Brisbane CBD, schools, recreation facilities and other services, far outweigh any negative impact experienced as a consequence of being under a flight path or from aircraft noise. This comprehensive study analysed all residential property sale transactions across 40 Brisbane suburbs ranging from high aircraft noise affectation to minimal or no aircraft noise impact. The study period covers the years since the commencement of airport operations at the current Brisbane Airport site. With more than 180,000 sales transactions analysed against geographic and socio-economic variables, this study is the most detailed and comprehensive overview and analysis of the impact of aircraft noise and movements on residential property prices and market performance ever completed in Australia.

ThE Impact of Aircraft Noise on Brisbane Residential Property Sectors: 1988-2013: Prof Chris Eves & Andrea Blake

Research Methodology This research study is based on the analysis of residential property sale transactions for the 26 years from 1988 to 2013 inclusive across a range of Brisbane suburbs with varying exposure to aircraft movements and noise. Table 1 provides the classification and location of the suburbs analysed in the study.

Suburbs were classified initially based on the number of aircraft noise complaints (contacts and clients) recorded by Air Services Australia over the past 5 years. These suburbs were identified as High Noise Complaints (HNC); Moderate Noise Complaints (MNC) and Minimal/No Noise Complaints (NNC). In addition, suburbs were also identified based on their location under the existing flight

paths and the new flight paths on completion of the 2nd parallel runway at Brisbane Airport, with streets directly under these flight paths being identified for analysis, based on the data and mapping provided in the Brisbane Airport Corporation Current and Future Flight Path and Noise Information Booklet. The final suburb classification was for streets in a number of suburbs that are currently unaffected by both the existing and the new runway. These suburb and street locations also covered a range of suburbs from high socio-economic status, high middle socio-economic status to low middle socio-economic status. All suburbs analysed in the study were inner ring to outer middle ring suburbs of Brisbane and were located within a 14km radius from the Brisbane Airport existing runway (southern end). In addition, streets within ANEL20 and adjoining ANEL 20 were also analysed.

Table 1: Suburb and Study Area Location Classifications HNC

MNC

NNC

South Flight path

North Flight Path

New Flight Path

No Flight Path

Morningside

Gordon Park

Annerley

Morningside

Ascot

Hamilton

Mansfield

Coorparoo

Northgate

Mitchelton

Camp Hill

Hendra

Annerley

Mitchelton

Camp Hill

Bulimba

New Farm

Seven Hills

Albion

Stafford

Wooloowin

Cannon Hill

Mount Gravatt East

Mansfield

Mount Gravatt Chermside East West

Tarragindi

Balmoral

Virginia

Balmoral

Ashgrove

Seven Hills

Clayfield

Chelmer

Murrarie

Bardon

Tingalpa

Ashgrove

Sherwood

Tarragindi

Norman Park

Chapel Hill

Jindalee

Coorparoo

Holland Park West

Wynnum

Forest Lake

The Gap

Fairfield

Kenmore

Murarrie

Hawthorne

Graceville

Belmont

Ascot

Hamilton

New Farm

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Significant Findings

Median House and Unit Prices; Noise Levels and Suburb Location Houses Houses in Brisbane locations subject to aircraft noise have shown similar, and in most cases higher, average annual capital returns compared to non-noise affected properties. Property price and investment performance is linked more closely to socio-economic status than aircraft noise impact. Location of residential property under Brisbane flight paths has not had any significant effect on the ability to rent residential property or any reduction in weekly rental rates across any of the various socio-economic residential property locations. These results confirm that in Brisbane, the decision to purchase a residential property in any given location is based on a range of factors. Exposure to aircraft noise is only one factor associated with suburbs located under aircraft flight paths. These results conclude that residential property buyers in Brisbane consider all factors in the purchase decision not just flight paths and aircraft noise. Consequently, aircraft noise affected locations achieved similar and most often higher capital growth despite this exposure to aircraft noise.

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Table 2: Capital Return and Investment Performance: Median Price 1988-2013 Location

Average Annual Capital Return (%)

Average Risk return Annual Ratio Volatility (%)

High Noise

8.66

9.49

1.09

Moderate Noise

8.52

8.87

1.04

No/Low Noise

7.93

8.47

1.07

Brisbane LGA

7.72

8.35

1.08

Tables 2 and 3 confirm that suburbs subject to the highest noise levels have recorded an average annual capital return over the past 26 years of 8.66%. This average annual capital return is higher than Brisbane suburbs with moderate or minimal and no noise affectation from aircraft movements. The average annual capital return is also significantly higher than the overall Brisbane residential property capital return of 7.72%. Irrespective of the degree of exposure to aircraft noise across the 36 suburbs studied in Brisbane, the actual trend in median house price movements over the 26 year period has been virtually identical. Figure 1 graphs the annual change in median house prices across suburbs subject to the varying levels of aircraft noise and Table 2 shows the correlation between house prices in the high aircraft noise complaint (HNC) suburbs compared to the moderate (MNC) or no noise (NNC) complaint suburbs.

ThE Impact of Aircraft Noise on Brisbane Residential Property Sectors: 1988-2013: Prof Chris Eves & Andrea Blake

Houses in Brisbane locations subject to aircraft noise have shown similar, and in most cases higher, average annual capital returns compared to non-noise affected properties.

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Table 3: Correlation: Suburb Comparison: Median Price: 1988-2013  

HNC

MNC

NNC

HNC

1.00

MNC

*0.95

1.00

NNC

*0.96

*0.93

1.00

Brisbane

*0.62

*0.62

*0.69

Brisbane

Figure 1: Suburb Comparison: Median Price ($ thousands): 1988‑2013 700 600 500

1.00

*Significant at the 5% level Based on the 26 year time period a significant correlation co-efficient at the 5% level would be r=0.37. Table 2 shows the correlation co-efficients (measuring the similarity in median house price movements from year to year) between the HNC suburbs and the MNC and NNC suburbs to be r= 0.95 and 0.96 respectively. These extremely highly positive correlation coefficients show that despite differences in levels of aircraft noise the change in median house prices from year to year has been virtually identical for the period 1988 to 2013. Not only have the median house prices been identical but the actual volume of sales have also been virtually identical with the annual movement in house sales showing similar very high levels of correlation (HNC and MNC r=0.90 and HNC and NNC r=0.89). This similarity in the growth trends of median house prices across all of the 36 Brisbane suburbs is also reflected in Figure 1. Although the HNC suburbs in the study are all suburbs located on the main southern flight path and are classified as middle to upper middle socio-economic suburbs, the MNC and NNC suburbs are actually a combination of middle, upper middle, and high socio‑economic suburbs of Brisbane. Many of these suburbs are classified as the highest value suburbs of Brisbane, i.e., Ascot, Hamilton, and Bulimba. Despite this difference in socio-economic status the HNC suburbs have actually recorded similar growth trends to the MNC suburbs, and at times higher than the NNC suburbs based on median house prices.

400 300 200 100 0 1985

1990

1995 HNC

2000

2005

MNC

2010

NNC

2015 Brisbane

If these higher value suburbs are removed from the MNC and NNC suburbs so that only middle socio-economic suburbs are compared to the HNC suburbs, the trend in price movement from year to year has been identical. The median house prices in the HNC suburbs have been higher than comparable middle socio economic suburbs in the less aircraft noise affected suburbs of Brisbane. These suburbs in the HNC locations are all well located to the Brisbane CBD and have good transport infrastructure, services and school options (Refer to Figure 2). Again, these noise impacted median house prices are higher than the Brisbane median house price for the same period.

Figure 2: Suburb Comparison: HNC v Middle Socio-economic: Median Price ($ thousands): 1988-2013 700 600 500 400 300 200 100 0 1985

1990

1995 MP HNC

2000

2005

MP Middle Socio

2010

2015

Brisbane

Table 4 also shows that the value of houses in the HNC middle socio-economic suburbs has not been affected over the long term despite aircraft noise. This table provides a sub period analysis of the variation in median house prices for middle socio-economic suburbs in the HNC classification to similar socio‑economic suburbs in the MNC and NNC locations.

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ThE Impact of Aircraft Noise on Brisbane Residential Property Sectors: 1988-2013: Prof Chris Eves & Andrea Blake

Table 4: Analysis of Variation between HNC Suburbs and Middle Socio‑economic Suburbs: Median Price and Average Annual Price Differences Period

Median Price Difference

Average Price Difference

Last 3 years

4.35%

2.19%

Last 5 years

3.62%

1.33%

Last 10 years

3.87%

2.89%

last 15 years

4.53%

3.45%

Last 20 years

3.24%

2.08%

last 25 years-

2.24%

0.30%

Over the period 2011 to 2013 the median house price in the HNC suburbs has been on average 4.35% greater than the MNC and NNC suburbs, with the average house price for the same period also being greater for houses subject to the highest levels of aircraft noise. This higher price trend for the HNC houses applies across all of the sub period analysis, including the period from 1988 to 2013. During this period the higher average annual house price difference for the HNC suburbs was 2.24% based on median house prices and 0.30% greater based on average house prices. The major conclusion from the sub-period analysis is that when the housing market is considered over time periods greater than 12 months, houses subject to aircraft noise in Brisbane have a higher median and average capital growth, with similar risk return ratios, when compared to less affected locations.

Units and Townhouses The location of home units and townhouses under Brisbane flight paths has little if any impact on the investment performance of these properties. Over the 26-year period of the study, units and townhouses in the HNC suburbs showed an average annual capital return of 7.66%, which is higher than the capital returns in the MNC suburbs (7.40%) but slightly lower than the capital return for units in the NNC suburbs. However, the risk return ratio for units in the HNC suburbs at 1.13 was a safer investment proposition compared to the NNC risk return ratio of 1.26.

Table 5: Capital Return and Investment Performance: Median Price 1988-2013 Location

Average Annual Capital Return (%)

Average Annual Volatility (%)

Risk Return Ratio

High Noise

7.66

8.67

1.13

Moderate Noise

7.40

8.06

1.09

No/Low Noise

7.86

9.87

1.26

Brisbane

7.18

8.80

1.23

Figure 3 shows the trend in median unit prices from 1988 to 2013 for units in the 3 Brisbane aircraft noise classified suburbs. The annual price movements have been very similar across all suburbs, with the median price per annum for HNC and MNC suburbs being very similar, with a very strong positive correlation co-efficient of r=0.71. The fact that the NNC suburbs include some of the higher socio-economic suburbs of Brisbane reflects in the overall higher median prices.

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As was the case with the Brisbane house price analysis, units in the middle socio-economic suburbs with the highest levels of noise exposure and complaints were compared to the middle socio-economic suburbs in the MNC and NNC suburbs. These results are shown in Figure 4 and reflect the greater similarity in unit price trends when the units in the HNC suburbs are compared to similar socio-economic locations not subject to the same levels of aircraft noise. On this comparison basis the median price for units in the HNC suburbs has been consistently higher than both the MNC and NNC suburbs and the Brisbane median unit price.

Table 6: Analysis of Variation between HNC Suburbs and Middle Socio-economic Suburbs: Median Price and Average Price Differences Period

Median Price Difference

Average Price Difference

Last 3 years

5.77%

6.21%

Last 5 years

3.98%

4.85%

Last 10 years

0.86%

3.44%

350

last 15 years

1.58%

1.87%

300

Last20 years

2.75%

2.44%

250

last 25 years-

1.97%

-0.12%

Figure 3: Suburb Comparison: Units Median Price: ($ thousands): 1988-2013 500 450 400

200 150 100 50 0 1985

1990

1995 HNC

2000 MNC

2005

2010

NNC

2015

Brisbane

Figure 4: HNC Suburbs v Middle Socio-economic Suburbs: Units Median Price: ($ thousands): 1988‑2013 450 400 350 300 250 200 150 100 50 0 1985

1990

1995 HNC

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A sub sector period comparison of the annual difference in median unit prices confirms the higher median prices for units in the HNC suburbs compared to similar socio‑economic suburbs in the MNC and NNC locations. Table 5 shows that over the three year period from 2011 to 2013 the average median price for units in the HNC suburbs was 5.77% higher than the MNC and NNC suburbs and on an average price basis was 6.21% higher.

2000

2005

Middle Socio

2010

2015

Brisbane

Table 6 shows the median and average annual house price variation percentage for houses located in the middle socio-economic HNC suburbs compared to middle socio‑economic suburbs in the MNC and NNC suburbs across a range of time periods from the last 25 years to the last 3 years. On a median unit price basis, the HNC suburbs recorded higher unit prices across all sub sector time periods. On the basis of average prices from 1994 to 2013 all sub sector time periods have shown a higher average unit price for the HNC suburbs. Based on the 25 year analysis the NNC and MNC suburbs have been slightly higher at 0.12% greater than the HNC suburbs. This longer period analysis reflects a similar trend to the housing market in Brisbane with the median price for units on a 25 year period being 1.97% higher on average each year over the 25 years but very slightly lower based on average annual price movements (-0.12%). This again is more of a function of the stigma of location on the south‑side of Brisbane that was very evident until the mid‑1990s, rather than aircraft noise issues, as the difference in average and median unit prices has been consistently higher in the HNC suburbs since the mid-1990s despite increased aircraft movements over this time.

ThE Impact of Aircraft Noise on Brisbane Residential Property Sectors: 1988-2013: Prof Chris Eves & Andrea Blake

The Brisbane Rental Market and Aircraft noise Aircraft noise or property location under a Brisbane flight path has also had minimal if any impact on the weekly rental prices for houses and units in Brisbane. Again, the main factors that appear to be determining rental values are location to the CBD, proximity to schools and services and access to transport, with the highest house and unit rents being in the higher value socio-economic suburbs. This is reflected in Figure 5 which shows that the middle socio economic suburbs that are classified as HNC have recorded slightly lower average weekly rentals across the period 1994 to 2013 when compared to the MNC and NNC suburbs that have a number of high socio-economic suburbs in the analysis. Although the NNC and MNC suburbs have shown a slightly higher average weekly rents compared to the HNC suburbs, Table 6 confirms that the actual change in rental values from year to year are extremely highly correlated between the three suburb classifications (HNC, MNC r = 0.95; HNC, NNC r = 0.88). This level of correlation shows that the location of rental property under the existing main southern flight path, that attracts the highest level of noise complaints, has a rental market increasing at the same percentage as properties not located under an existing flight path.

Figure 5: Suburb Comparison: Rental Rates of 3 Bedroom Houses 1994-2013 500 450 400 350 300 250 200 150 100 50 0 1990

1995

2000

2005 HNC

2010 MNC

2015 NNC

Table 7: Correlation Analysis: Average Weekly Rents: Houses 1994-2013  

NNC

MNC

NNC

1.00

MNC

*0.93

1.00

HNC

*0.88

*0.95

HNC

1.00

*Significant at the 5% level

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Investment Performance, Socio‑economic Status and Flight Path Location A comparison of the capital returns, volatility and investment performance of the various suburbs in the analysis was undertaken to determine if suburbs with high exposure to aircraft noise and movements differed to similar socio‑economic suburbs with moderate or no exposure to aircraft noise. These results are shown in Tables 8 to 11. This analysis compares suburbs ranging from high socio‑economic status to low middle economic status.

These capital returns for Bulimba are slightly higher than New Farm, which is not under any existing flight paths and not subject to any aircraft noise complaints; however, will be subject to the new runway flight path. The capital returns for Ascot and Balmoral, which are currently not under a flight path, are less than the capital returns for Bulimba. The higher return suburbs also have the highest volatility and risk/return ratios.

High Socio-economic Suburbs

Higher Value Middle Socio‑economic Suburbs

Table 8 compares the capital return performance of each of these suburbs and shows that over the period 1988 to 2013 there has been very little difference in the growth in house prices across these high value suburbs regardless of location and exposure to aircraft noise. One of the best performing suburbs on an average annual capital return basis has been Bulimba, which is under an existing flight path and subject to moderate levels of noise complaints.

Based on these figures it can be assumed that the location of a high value housing suburb under a flight path and subject to moderate noise complaints does not suffer any long term impact in relation to house price movements and capital growth.

These higher value middle socio-economic suburbs are all outer inner ring or inner middle ring suburbs of Brisbane and are all conveniently located to the Brisbane CBD. Three suburbs are located south of the Brisbane River and four suburbs are located north of the Brisbane River.

Table 8: Comparison: Capital Return and Investment Performance High Value Suburbs: 1988-2013

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Suburb

Flight Path

Average Annual Capital Return

Volatility

Risk/Return Ratio

Bulimba

Existing Flight Path South MNC

12.44%

20.01%

1.61

Balmoral

New Flight Path South MNC

10.22%

14.46%

1.42

Ascot

New Flight Path North MNC

10.55%

12.79%

1.27

Hamilton

New Flight Path North NNC

12.83%

22.41%

1.75

New Farm

New Flight Path North NNC

12.41%

16.54%

1.33

ThE Impact of Aircraft Noise on Brisbane Residential Property Sectors: 1988-2013: Prof Chris Eves & Andrea Blake

These results again confirm that houses located under existing flight paths in Brisbane and subject to high levels of noise complaints have achieved capital growth over the past 26 years equivalent or higher than areas not affected by aircraft noise.

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Table 9: Comparison: Capital Return and Investment Performance High Middle Value Suburbs: 1988‑2013 Suburb

Flight Path

Average Annual Capital Return

Volatility

Risk/Return Ratio

Camp Hill

Existing Flight Path South HNC

9.52%

13.75%

1.44

Cannon Hill

Existing Flight Path South HNC

9.72%

11.72%

1.21

Coorparoo

Existing Flight Path South HNC

9.09%

13.48%

1.48

Gordon Park

Existing Flight Path LNC

9.34%

9.18%

1.05

Ashgrove

Existing Flight Path MNC

9.20%

9.96%

1.05

Bardon

Existing Flight Path NNC

9.02%

11.34%

1.26

Hendra

New Flight Path MNC

10.09%

14.65%

1.45

Wooloowin

No Flight Path NNC

9.19%

10.55%

1.15

The actual impact of aircraft noise on the long term housing market performance of the higher value middle socio-economic suburbs of Brisbane is also demonstrated in Table 9. The variation in average annual capital returns for these 7 suburbs range from 10.09% to 9.02% per annum. Two of the highest average annual capital returns for the 26 year period were achieved in the suburbs under the main southern flight path and subject to the highest number of noise complaints (Camp Hill 9.52% and Cannon Hill 9.72%). The highest average annual capital return for this suburb classification was Hendra at 10.09% per annum. This suburb is not currently under a flight path but actually adjoins Brisbane Airport. Again the suburbs with the higher average annual capital returns also had the higher price volatility and risk return ratios. Of interest with these high value middle socio-economic suburbs is the high return for suburbs of Gordon Park and Ashgrove but relatively low volatility at 9.18% and 9.96% respectively. These suburbs had the lowest risk/ return ratios across the full study locations and less than the Brisbane median house risk return ratio of 1.08. Both these suburbs are under existing flight paths and subject to low and moderate aircraft noise complaints.

These results again confirm that houses located under existing flight paths in Brisbane and subject to high levels of noise complaints have achieved capital growth over the past 26 years equivalent or higher than areas not affected by aircraft noise.

Middle Value Middle Socio‑economic Suburbs Again, these suburbs classified as middle socio-economic, cover suburbs to the south and north of the Brisbane River. All are middle ring suburbs of Brisbane, apart from Albion that can be classified as an inner ring suburb close to the Brisbane CBD, but a suburb with a significant industrial property sector (Refer to Table 9). Table 10 again shows the similarity in capital growth and investment performance when suburbs are compared on a like to like basis. For these middle socio-economic suburbs the average annual capital growth over the period 1988 to 2013 has ranged between 8.67% and 8.23%. If Albion is excluded, the volatility has been relatively consistent when compared to the analysis for the higher value residential property sectors, ranging

Table 10: Comparison: Capital Return and Investment Performance Middle Value Suburbs: 1988-2013

10

Suburb

Flight Path

Average Annual Capital Return

Volatility

Risk/Return Ratio

Tarragindi

Existing Flight Path HNC

8.58%

10.49%

1.22

Albion

Existing Flight Path MNC

8.23%

17.11%

2.08

Stafford

New Flight Path NNC

8.45%

11.20%

1.33

Annerley

New Flight Path NNC

8.23%

10.31%

1.25

Mansfield

No Flight Path NNC

8.28%

12.06%

1.44

Mitchelton

No Flight Path NNC

8.67%

10.67%

1.23

ThE Impact of Aircraft Noise on Brisbane Residential Property Sectors: 1988-2013: Prof Chris Eves & Andrea Blake

Table 11: Comparison: Capital Return and Investment Performance Lower Value Suburbs: 1988-2013 Suburb

Flight Path

Average Annual Capital Return

Volatility

Risk/Return Ratio

Mt Gravatt East

Existing Flight Path MNC

7.93%

9.63%

1.21

Chermside West

Existing Flight Path NNC

6.46%

11.92%

1.85

7.72%

8.35%

1.08

Brisbane Median

from a low of 10.31% for Annerley to a high of 12.06% for Mansfield. The highest performing risk/return suburb was Tarragindi with an average annual capital return of 8.58% and a volatility of 10.49%. This investment performance is for a suburb under the main southern flight path and subject to high aircraft noise complaints. Tarragindi outperforms Mansfield and Mitchelton which are not subject to any existing or future flight paths or any aircraft noise complaints. These results also indicate that the change in median price for houses in these suburbs is driven by factors other than aircraft noise.

Lower Value Middle Socio‑economic Suburbs There are only two suburbs analysed in this study that fall into the socio-economic classification of lower middle socio-economic. Mt Gravatt East and Chermside West are classified as outer middle ring suburbs of Brisbane, with Chermside West located north of the Brisbane River and Mt Gravatt East south of the Brisbane River. Both these suburbs are under the existing runway flight paths and

subject to moderate aircraft noise complaints (Mt Gravatt East) and minimal aircraft noise complaints (Chermside West). Residential property in these two suburbs would be more typical of the Brisbane median price house. The average annual capital return for houses in these two suburbs has been considerably lower than the other sectors discussed above. Chermside West has recorded the lowest average annual capital returns for all suburbs in the study and is the only suburb that has a lower capital return than the Brisbane median house price. This low return and relatively high volatility also results in houses in this suburb recording one of the higher risk/return ratios of 1.85. Although this suburb is under the existing northern flight path, its location does not result in any significant levels of aircraft noise complaints. Mt Gravatt East is located under the southern flight path and is subject to moderate aircraft noise complaints; however the average annual capital return for the past 26 years for houses in this suburb has been greater than the Brisbane median house price capital return.

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Final Conclusion Overall the study has proven that housing and units in Brisbane located under designated flight paths have their value and price determined by a range of factors and these factors are not detrimentally impacted by aircraft noise. The location of a property under a flight path will have minimal if any impact on the price, saleability, investment performance and capital growth of that property.

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ThE Impact of Aircraft Noise on Brisbane Residential Property Sectors: 1988-2013: Prof Chris Eves & Andrea Blake

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