How Melbourne’s Metro & West Gate Tunnels Impact Property Values 2025

Melbourne's Tunnel Infrastructure: A Definitive Guide to Property Value Impacts

Melbourne's major infrastructure projects, specifically the Metro Tunnel (rail) and the West Gate Tunnel (road), are fundamentally reshaping the city's property landscape. The primary impact on property values is hyper-local, creating distinct winners and losers determined by a property's precise location relative to the new infrastructure. While the projects deliver widespread benefits in connectivity and amenity, the financial outcome for individual properties is highly granular.

The Metro Tunnel (Rail): Value Uplift Through Connectivity

The Metro Tunnel is a city-shaping rail project designed to untangle the City Loop by creating a new end-to-end line from Sunbury in the west to Cranbourne/Pakenham in the southeast. It includes five new underground stations, which are creating significant value uplift in their surrounding areas.

Primary Beneficiaries:

• Proximity to New Stations: Properties within an 800-metre walking radius of the new Arden, Parkville, State Library, Town Hall, and Anzac stations are experiencing the highest demand. The Anzac Station, for instance, provides the St Kilda Road residential and business precinct with its first direct rail link, unlocking significant latent value.
• Urban Renewal Zones: The Arden Station is the epicentre of a major urban renewal precinct projected to accommodate 15,000 residents and 34,000 jobs. This state-led development is transforming an industrial area into a new inner-city suburb, driving substantial long-term capital growth in North Melbourne and its surrounds.
• Enhanced Commuter Corridors: Suburbs along the Sunbury, Cranbourne, and Pakenham lines will benefit from increased service frequency and reliability. This improvement in public transport is a key driver of property appeal for commuters, strengthening values across these extensive corridors.

The West Gate Tunnel (Road): Boosting Amenity in the Inner West

The West Gate Tunnel project creates a vital alternative to the heavily congested West Gate Bridge, with a primary objective of removing heavy vehicle traffic from local inner-western streets.

“New underground stations typically deliver a premium to nearby property values through improved accessibility.” — Aran Barker, Principal, Town Planning, Melbourne.

Primary Beneficiaries:

• Inner-West Suburbs: The most significant positive impact is concentrated in suburbs such as Yarraville, Footscray, Seddon, Kingsville, and Spotswood. The diversion of thousands of trucks from local roads like Francis Street and Somerville Road dramatically improves air quality, reduces noise pollution, and increases safety, making these areas significantly more desirable for families and professionals.
• Western Commuters: Improved travel times and traffic flow between the western suburbs and the CBD make the region more attractive to buyers, supporting property values in Melbourne's key growth corridors.

Proximity Risk: The Negative Impact on Property Values

While the network-wide effects are overwhelmingly positive, properties situated in immediate proximity to the physical infrastructure may experience a devaluation.

The golden rule for infrastructure impact is "close, but not too close." The value is captured by benefiting from the access and amenity the project provides, not by being directly adjacent to its physical components.

Key risk factors that can negatively impact value include:

• Proximity to Portals and Ventilation Structures: Properties directly overlooking or adjacent to tunnel entrances, exit ramps, or prominent ventilation stacks can be negatively affected by visual bulk, traffic noise, and perceived air quality issues.
• Direct Adjacency: A small number of properties located directly above or immediately beside the tunnel's physical structure may see suppressed demand due to concerns about vibration, construction disruption, and long-term geological stability, even with engineering assurances.

In conclusion, the impact of Melbourne's tunnel projects is a tale of two markets. Properties that gain improved access and residential amenity will see strong capital growth, while those that bear the direct physical impact of the new infrastructure may see their values stagnate or decline.

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