How Schools Affect Real Estate

Being in the right school zone area can have a profound impact on a property’s value.

We explore exactly what premium a catchment are can put on a home’s value, what impact it should have on a marketing home if you’re selling, and whether it’s worth paying the extra if you’re buying a home.

Why do people care about school catchment area?

Most government schools only allow enrolments from students living in a designated geographical area, close to the school. The idea behind this is that all primary and high school student should have access to a local state-funded education.

The problem is that not all schools are created equal. For various reasons, some perform well and earn a good reputation for something like academics, sporting or cultural achievement. Others aren’t so lucky.

The effect of this, of course, is that many parents will pay more for a home in a street that guarantees their child a place at a top performing school. After all, it’s only natural that most parents want the best for their kids.

How much does a school catchment area affect a property’s value by?

Working out exactly how much being in the right catchment area increases a home’s value by is a relatively difficult exercise. However, a Domain report found that in the 12 months to October 2016, the average sales price in Sydney’s 10 most popular catchment areas rose by more than 20%, compared to a Sydney-wide average of just 1.5%. That means it could be worth as much as 18.5% of a property’s value.

Another study by the Real Estate Institute of Victoria revealed that schools in sought after catchment areas consistently sold for more than similar homes outside of the school zone by anywhere between $50,000 and $1,000,000, depending on where they were located.

In other words, for the right house, near the right school, it can make a sizeable price difference.

What does this mean if you’re selling your property?

Your real estate agent should know which school catchment zones your property falls into.

If it is located in a prized catchment area, they will emphasise this in their marketing to focus on attracting family buyers willing to pay a premium to be in the right school zone. Alternatively, they may focus on investors who are looking to lease out the property to a family who want to be near the school of their choice.

What are the risks of buying based on a catchment area?

If you’re looking to buy based on catchment area, there are some risks.

Firstly, school catchment areas are subject to review, and can be changed. So a once sought after address can fall out of favour if the catchment changes.

Secondly, the popularity and reputation of a school will rise and fall, and the desire of premium buyers to be in that school’s catchment area is likely to rise and fall in line with this.

That said, buying a property based on a school zone is usually a long-term option, especially as the average child has 13 years of schooling to look forward to. And many prized and fiercely competed school zones are also close to a city centre, or near good transport links, so buying into a good catchment area is not usually a risky proposition.

And finally…

While being located in a good school catchment area can affect the value of a home it shouldn’t be the only thing you take into consideration when buying a home. It affects certain areas more than others. And it’s not the only thing that families will pay for. Proximity to amenities, transport and great lifestyle options will almost always have the biggest say in a property’s value.