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Educational facilities are an important driver in property values that should be seriously considered by investors when building a property portfolio.
Blogger: Paul Bennion, managing director, DEPPRO
Our company has undertaken thousands of tax depreciation reports for investor clients over the years who have bought into suburbs because their new investment properties were located close to schools.
These individual investors who have used our services, have not just bought one property close to schools but several over an extended time frame as it has proven to be a wise investment strategy.
For investors, buying close to a school can have a positive impact both on rental returns and future capital growth.
For renters with families, schools are a key issue as they want to have easy access to their important community asset.
At the same time, schools which have a high educational reputation underpin local property values as families want to give their children access to the best education possible.
The scale and importance of the schooling sector in Australia has been highlighted by recent ABS figures on the sector.
Between 2014 and 2015, the number of students enrolled in schools in Australia grew by 56,872 (1.5 per cent) to a total of 3,750,973. The increase was greater in government schools (1.6 per cent) than non-government schools (1.4 per cent).
Within the non-government sector, the number of students attending independent schools increased by 2.0 per cent, while those attending Catholic schools increased by 1.0 per cent.
Across the states and territories, the largest proportional increases in student numbers occurred in Western Australia (3.1 per cent), followed by the ACT (2.3 per cent) and Victoria (1.9 per cent). Student numbers fell slightly in the Northern Territory (0.5 per cent) and Tasmania (0.4 per cent).
At the affiliation level, student numbers at independent schools rose by 5.4 per cent in the Northern Territory and by 2.4 per cent and 2.3 per cent in Western Australia and Victoria respectively. Students attending Catholic schools rose by 3.5 per cent in Western Australia and by 1.8 per cent in Queensland.
The ABS figures also revealed that government schools continue to be the major provider of school education in Australia in 2015, with 2,445,130 students (65.2 per cent of all students) attending, while 1,305,843, students (34.8 per cent of all students) attended non-government schools.
Schools are just one piece in the infrastructure jigsaw that investors should consider when buying an investment property.
Other key infrastructure that may have a positive impact on future rental and capital growth rates are new shopping and medical facilities as well as public transport investment such as the light rail.
Focusing on fundamental drivers of property values like new infrastructure is even more critical in the Australia property market today with property prices now under a downward pressure in many capital cities.
As market conditions become more challenging, properties that are in most demand due to their location close to infrastructure will outperform the overall market both in terms of rental and capital growth.