The extension of Sydney's light rail network could see house prices increase, as happened in the US, suggested a paper from lobby group the Tourism and Transport Forum (TTF).
Australian home owners in the area will also enjoy improved local amenities, the Benefits of Light Rail paper said.
It found that light rail improves land values and raises investment opportunities, as well as encouraging people to leave their cars and opt for public transport.
"The longevity, durability and branding appeal of light rail infrastructure send a positive message to planners and developers," said TTF executive director Brett Gale.
He called on the state government to consider further extensions to the light rail system, as this would reap "substantial economic rewards".
The TTF is calling for a greater focus on transit-oriented development to help Sydney counter urban sprawl.
By Steve Douglas