Do properties in high performing school areas cost more?

publication date: Nov 25, 2009
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Since league tables were introduced in 1992, there have been many reports suggesting that you would pay up to a 34% premium for properties in high performing school catchment areas!

Back in October 2007, Savills' research suggested that prices for property in poor performing school areas led to properties being worth 10% less than other homes, 13% more for good state schools and up to 15% more for good private schools.

So has the recent house price crash made a difference to premium prices for good schools? Nationwide have issued a recent report that suggests not.

According to Martin Gahbauer, Nationwide’s Chief Economist: “Using the Nationwide House Price Index and the Primary School Performance Tables published by the Department for Children, Schools and Families (DCSF), we have assessed how property prices vary in relation to the proportion of 11 year olds achieving Level 4 or above in their Key Stage 2 Standard Assessment Tests (SATs) at the nearest school.”

Their research concludes (see chart below) that a 10% increase in the SATs pass rate at the nearest primary school adds on average 3.3% to the price of a typical house, while in some regions of the country, the premium can even exceed 4%.

Impact of Primary School Performance on House Prices

For those living in Yorkshire and Humberside, the research suggests that schools with a 10% improvement in pass rate adds as much as 4.6% (over £6,000) to the price of a typical property in the region.

Overall, if you compare the price of a property near to a poor performing school versus a top performing one, the overall difference is around 11% in the price.

What does this mean for Mums and Dads?
Unfortunately it does mean that you have to be very prepared if you want to buy (and even rent) in a good school catchment area as buyers will often compete on price and ‘over pay’ for properties. Typically, good school areas are in high demand due to other factors such as attractive property stock, access to local shops and good communications. As a result, these areas have typically come out of the property price crash faster than others and not dropped in price quite so much.

What if you are a parent and can’t afford a property in a good school catchment area?
If you are struggling to afford a property near a well performing school, it’s worth looking for a school that has just had a new head who has a good reputation for turning schools around. The league tables will take a little while to reflect any success the new head achieves and nothing can be taken for granted, but there are many case studies of areas that have improved dramatically thanks to a good team of teachers!

If you haven’t got kids does it matter?
Not really! Being on the edge of a good area can mean you can secure a great property for a lot less money while enjoying the shops/restaurants and good communications of the area nearby.

However, it is worth bearing in mind that if you do buy in an area with top performing schools you will pay for the privilege, but benefit from a buoyant property market that will suffer less if there is a property price crash.

What does this mean for property investors?
If you are investing in renovation projects, then it’s worth knowing you will probably be competing against homeowners that are less worried about making a profit and more concerned about creating a home for their family for the next 10-20 years. So it’s typically harder to secure a bargain unless you look around November/December when few families look to move.

From a buy to let perspective, you are less likely to get a good yield in these areas as you’ll pay a higher price for the property and are unlikely to get the equivalent increase in rental income to compensate.

Find out what's going to happen to house prices in 2010. Want to know what's happening with property prices in your area? Take a look at our comprehensive property market analysis. Do you have a property question or problem, then tel 0845 838 1763 or contact us?

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