Public school catchments attract six-figure property premiums but may not deliver better long-term returns. Families are paying up to $1.3 million more for houses in popular public school catchments, according to new research by Cotality.
Around 53% of couple-headed families have dependent children, making school catchment and family-friendly buying an increasingly important factor in property decisions. However, buyers should be aware that paying a premium for a top school zone doesn’t necessarily guarantee better investment returns.
Cotality’s custom boundary analysis compared house values inside high-performing public school zones with nearby properties outside the boundary.
“In some of the most in-demand school zones, families are paying hundreds of thousands – and in one case more than a million dollars – more for a house compared to similar houses outside the boundary,” said Eliza Owen (pictured), head of research at Cotality.
The biggest price gap was found in Sydney’s North Shore, where homes in the combined catchments of Killara High, Willoughby Girls, and Lindfield Learning Village held a median value almost $1.3 million, or 39.8%, above similar homes outside the zones.
However, these properties recorded 15-year capital growth of 126%, falling short of 150.3% growth in neighbouring suburbs.
In Melbourne, a top destination for would-be homeowners, the median premium for houses in the catchments of Princes Hill and University High School was $357,000. Long-term capital growth for homes in these zones reached 82.6% over 15 years – lower than the 106.1% growth in surrounding areas.
Of the nine school catchment clusters analysed across both cities, seven had higher median house values, but six recorded weaker capital gains.
“These premiums may reflect the value placed on getting into top public schools, but it could also reflect an array of other factors like proximity to train stations, or the high incomes of those living inside the catchment area,” Owen said.
The analysis also uncovered catchments where homes were cheaper than those outside the zone.
“Houses in the catchment of Cherrybrook Technology High School were $155,000 lower than outside the catchment in the same suburbs, while houses in the Doncaster Secondary College catchment were $48,000 lower than those outside the catchment,” said Cotality quantitative analyst Irene Kang.
For many families, buying into a desirable public school zone could represent long-term savings compared to private schooling.
“In six of the nine regions we analysed, the house price premium within public school zones was at least $100,000,” Owen said. “While that’s a significant upfront cost, it could end up saving families money when compared to paying for private schooling over many years.”
Futurity Invest estimates the average cost of 13 years of private education in Australia at $349,000, with some Sydney schools charging over $46,000 annually – more than $270,000 for high school alone.
“For young families juggling tough decisions around housing and education, paying the premiums could be worthwhile,” Kang said. “After all, private schooling costs can be in the hundreds of thousands, while a good state school catchment could deliver decent returns from both a housing and educational perspective.”
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