It’s generally accepted that school quality affects property prices in the area. Here we’ll look at why and how schools can affect house prices, and at what buyers, sellers and investors need to bear in mind.
First a few expert opinions on school catchment areas and house prices:
Past research from the Department for Educationsays that house prices near the 10% best-performing primary schools are 8% higher than in the surrounding area. Near the 10% best-performing non-selective secondary schools house prices are 6.8% higher.
Some commentators suggest the difference is much more than this in some places. Agents Liberty Gate report that a good school affects house prices by 79% in one part of London, by 94% in Solihull and as much as 223% in one town in Cheshire. They say property in the catchment area for good primary schools can impact prices by 40%.
Looking at these estimates together, it could mean a fairly average house otherwise worth £300,000 would be worth at least £324,000 if near a good primary school, or possibly up to £420,000!
Now let’s look in more detail about how and why schools affect house prices and what we might be able to learn from this.
It’s a fact of life that not all schools are the same. Some are considered to be better than others. Secondary schools that have better GCSE results, have better A level results and deliver better university opportunities for their students are, rightly or wrongly, usually considered more desirable.
All this is compounded by the school system in the UK, which in many ways doesn’t make a lot of sense. There are fee-paying independent schools. There are ‘free’ state schools, some of which are comprehensive and some of which operate a selective system. But when looking at exam results alone there is often not much to distinguish the exam results at a good state school from those at an independent school.
Living in the catchment area for a good state school can save parents a lot of money. The Good School Guide estimates that an independent day school could cost parents an average of £270,000 (or up to £470,000 in London) over a child’s education. Multiply that by two (or three) children and parents can make a million pound or thereabouts saving. A saving that potentially fuels the housing market in the catchment areas of good state schools.
So what do you need to know about schools and property prices?
Firstly when buying or investing in property decide how important school quality is to you. If you don’t have school age children – perhaps you’re a first time buyer and any thoughts of children are years away or an older couple or single – you almost certainly WILL pay a premium for buying near a good school. Yet you won’t receive any benefit in return.
If you are investing, again, decide if school quality will benefit you. If you plan to rent or resell to families then yes it might lift the letting and resale value. But if you have paid more for the property due to being near a good school the yield might actually be lower. If you plan to rent or resell to those without children then the numbers for investing near a good school might not add up at all.
It’s also very important to do research.
School catchment areas are possibly one of the most arcane and difficult to grasp creations ever. In some places, good schools are vastly oversubscribed and the chances of getting a place outside their catchment area are zero, but in others the chances are actually fairly good. The chances of getting a place can vary from year to year depending on how many applications there are, how many pass the entrance test (if a selective school), if a sibling is already at the school and several other factors.
School websites will provide some information about this. Ofsted ratings sometimes have a vague relationship to local property prices. But it’s advisable to do your own digging too. Existing parents are often willing to share their experiences – the Mumsnet site is a great place for parents to seek opinions about school quality and the workings of catchment areas.
Estate and letting agents often have a good understanding of how local schools affect property prices and rents. They may be able to tell you how much of a premium you will pay for a house in a certain catchment area versus a very similar house outside it, and what impact it might have on letting potential and rental income.
Lastly, one more important point about schools and property prices: It’s often assumed that good schools are always in the most expensive residential areas. That’s not always the case. Although a good school almost certainly will elevate local property prices there are still very good schools in areas where house prices are well below the local or even national average.