09 Apr The impact of schools on property values
In today’s show Paul Osborne, from Secret Agent, talks about the correlation between housing prices and school quality.
Kevin: I’ve often been involved in this conversation myself, but quite often people will say, “How important is the school zone or the area where the kids will go to school? Does that actually impact property prices?”
Lots of people will give you different impressions. I read a really interesting report that was put out by Secret Agent. They’re buyer’s advocates out of Melbourne – a great website, too, for you to go and have a look at, a lot of tremendous reports there. These guys produce a number of reports each year that are very detailed and they’ll give you a lot of insight about what’s happening in the market. The website is SecretAgent.com.au.
The man behind that site, along with a big team, is Paul Osborne. Good day, Paul.
Paul: Good day, Kevin.
Kevin: The question I pose of you today is do home prices get impacted by the quality of the schools in the area?
Paul: I would say most definitely. I think when anybody is looking to purchase a property wrapped up in the price of that asset is always going to be amenities. We always know cafés and restaurants and access to the CBD is important, but increasingly important is the particular school zone that a property might fit within and how it actually goes in terms of its scoring mechanisms.
Kevin: Is choosing a home inseparable from choosing a child’s education, do you think?
Paul: I think it always depends on the individual. But what we have found is that with prices escalating, and this move towards being in more central locations, that there is now a preference for many parents for perhaps rather than buying into a particular area that might be suited towards a very good private school, they’re looking to get to an area that’s close to the CBD with a very good public system or a good public state school where they can put two kids through school without having to incur the cost of $30,000 to $40,000 per annum, and instead to plough that into the mortgage and to live in a different area altogether.
Kevin: Paul, is there a number that you could say the value of property in this area is going to go up because it’s in a good catchment area?
Paul: The analysis that we uncovered was that on average, a 1% increase in the percentage of study scores that were over 40 – study scores are marked out of 50, which is the highest that you can get – increased the price of a house in the affected school zone by $19,000.
Kevin: Now, this is backed up from some study. I understand there was one done in New Zealand, as well, that you’ve relied on, too. Is that correct?
Paul: Correct, yes. We were very interested by the advanced workings that were going on in New Zealand and the type of research that was coming out of there, which showed also that when school zones are actually altered, that it would potentially devastate one area in terms of its pricing and drop the price when it was no longer factored into a good school zone that parents had a preference to putting their kids into.
It was something that we looked at in terms of the New Zealand studies. We’ve applied it predominantly to Melbourne, but we’ve loosely looked at this into other states and cities across Australia and have found similar findings in terms of the research.
Kevin: Yes. The report, as I said, is available at the website SecretAgent.com.au. Just to wrap it up, Paul, if we could, just your conclusion from this – the bottom line.
Paul: I think the bottom line is that the way that we’re living today is very different in terms of we’re potentially looking at many small spaces – living in apartments, for example – and having a family within those particular areas where there haven’t traditionally been great schools. We’ve seen Haileybury College in Melbourne, for example, which has gone and purchased a $52 million city block in a city to develop a city campus.
There is a changing way of where kids are being brought up. One way that parents are looking at this is “We want to get into where we want to live, and if we can find a terrific school that comes under a school zone with higher study scores than another particular school, we’ll locate our preferences in that area, and therefore, we’re happy to pay a premium to do so.”
Kevin: There’s the bottom line. The report is available for you at SecretAgent.com.au.
My guest has been Paul Osborne from Secret Agent. They’re buyer’s advocates out of Melbourne. Thanks for your time, Paul.
Paul: Thank you.