Pittwater Life March 2017 Issue

Business Life: Finance
Business Life
High speed fibre internet
= increased house prices
A
hot topic that has
gotten people talking
lately centres on the
proposition that high Internet
speed – or more specifically
Fibre Internet – increases
property value. Research in
the US and the UK highlights
the positive correlation
between the two.
Being a share market guy
means I spend an enormous
amount of time studying and
researching companies and
sectors. My particular area of
expertise is where the… in
fact, how the whole shooting
match affects the future as
we know it.
When Google launched its
gigabit Fibre service in July
2012 they announced that a
direct Fibre Optic connection
50
to a home would improve
its value by between
US$2,000 – US$5,000. A
recent study by Wichita
State University noted
that “Kansas City’s
housing market is clearly
on the rebound” and
that home values were
expected to rise 2.7 per
cent in 2014, roughly a
year after Google Fibre
was deployed.
Verizon (USA) on
its website cited a 2008
study conducted by
Park Associates: Multi-
Dwelling Units (MDUs)
residents estimated the
rental value of a standard
2-bedroom, 2-bathroom,
1,000-square-foot apartment
offering Verizon Fios Fibre
MARCH 2017
Internet to be an average of 5
per cent more per month than
one offering DSL/satellite/
cable services.
That study supported
academic researcher Gabor
Molnar from University
of Colorado, whose
2013 study found that “…
the presence of fibre-based
broadband was associated
with a positive effect on
property values in the
neighbourhood”; hence Fibre
availability may drive real
estate prices upwards.
There has been an
explosion of demand for
Fibre Internet in recent years.
For instance, over 1,100
cities in the US are in line
with requests that Google
introduce Google Fibre in
their municipalities. Cities
that fail to get picked for
Google Fibre are looking
for ways to either build it
themselves or partner with
someone who will do it for
them.
“It’s getting to the point
where, if my neighbouring
community has a gigabit and
we’re still doing satellite, the
property value in that town is
going to go up,” commented
Deb Socia, Director of Next
Century Cities which is a
coalition of cities working
to provide Gigabit Internet
services to their residents.
with Simon Bond
In the UK, broadband
speed is now regarded
as the “fourth utility”
after gas, water and
electricity, said BBC
property expert Henry
Pryor. “I was involved
with a survey that
looked at the impact of
broadband speed on
people looking to buy
or rent and the potential
impact on prices and we
found a home without
at least a standard
broadband connection
could be worth up to
20 per cent less than
a comparable property,” Mr
Pryor said. A property needs
21st century connectivity.
“More people are making
decisions to work from home
fulltime or even part of
the time. More demanding
buyers now want Fibre-Optic
superfast speeds for things
like streaming entertainment
and managing a host of
equipment that relies on this.”
According to a study of
British homebuyers, a good
broadband connection now
tops off street parking and
access to local amenities
as one of the vital deciding
factors for people buying
a new house. The study
also found that one in ten
buyers have walked away
from properties with poor
internet connection – and that
broadband is connected even
before gas.
Home owners in London
are also willing to pay up to 8
per cent above the market
price for properties in areas
offering very fast internet
speeds. Statistics compiled
over a 15-year period,
from 1995-2010, show that
property prices across the UK
increase on average by about
3 per cent when internet
speed doubles.
Website Rightmove.co.uk
has added broadband speeds
and availability to its lists