Do good schools actually increase house prices in the surrounding area? And if they do, by how much? Is the increase so significant that buying near good schools is something that investors should be focusing on?
The common line of reasoning is that parents who want the best for their children, want those children going to nice schools. Those parents would be willing to pay a premium to live within catchment areas for schools with a good reputation, so that admission is guaranteed for their children. Lots of parents competing for a limited supply of housing would result in price growth.
Turns out, we aren’t the only ones to have wondered about this, and the Queensland University of Technology conducted a study on how good schools affected property prices in Brisbane. Here’s what they found out.
In the case of primary schools, buyers are willing to pay 26% more for properties in the catchment areas of highly ranked schools, and 8% more for moderately ranked schools.
In the case of high schools, properties within high-ranked school’s catchments are 11% higher than those that are not. Similarly, properties within the catchments of high-ranked secondary schools show an increase of 9% in rent prices.
Another interesting find is that the distance to the school decreases property price by 4% per kilometre. Even within the same catchment area, properties physically closer to the school will be more expensive than those further away.
These findings support the common wisdom that purchasing near highly-regarded schools is a sound investment decision. Properties closer to good schools have statistically significant higher capital growth and higher rental incomes.
2021 Update
In September 2021, Domain released a School Zones Report which compares the performance of real estate in school catchment zones compared to the rest of the suburb.
Analysis of Melbourne data reveals:
- House prices have risen in 83 percent of analysed school zones.
- Growth in 48 percent of primary school zones and 52 percent of secondary school zones was higher compared to the rest of the suburb.
- Approximately one of every ten school zones saw an increase between 10-20 percent over the general suburb’s growth rate.
In Brisbane:
- House prices have risen in 92 percent of analysed school zones.
- Growth in 54 percent of primary school zones and 56 percent of secondary school zones was higher compared to the rest of the suburb.
- Approximately one-third of school zones saw an increase of 10 percent over the general suburb’s growth rate. Around 15 percent of school zones saw growth even higher than this.
This new data further supports the claim that property in the catchment zones of highly-regarded schools will outperform property outside of desirable school catchment zones.∎
