Families paying higher premiums for top public school zones
Despite paying higher premiums for homes in sought-after public school zones, families are not always rewarded with strong capital growth in the long term.
New analysis has revealed families are paying up to $1.3 million more for houses in public high school catchments in Sydney and Melbourne.
Cotality’s report compared property values inside popular high school zones with comparable homes outside the zones but in the same suburbs.
The data revealed that while families are paying hefty premiums for houses in these areas, their choices do not always deliver on capital growth in the longer term.
In Sydney’s North Shore, homes in the combined catchments of Killara High, Willoughby Girls, and Lindfield Learning Village were found to hold a median value almost $1.3 million above houses outside the catchment.
However, long-term growth for houses inside the catchment proved to be lower than the capital growth for comparable homes outside the zone.
According to data, the houses within the public school catchment recorded a growth of 126 per cent over the past 15 years, compared to 150.3 per cent in nearby markets.
For Melbourne’s catchments of Princes Hill and University High School, premiums were $357,000 but capital growth was only 82.6 per cent over 15 years compared to 106.1 per cent outside of the catchments.
“Of the nine school catchment clusters analysed across Sydney and Melbourne, seven had higher median house values compared to out-of-catchment homes,” Cotality said.
“However, six of these also recorded lower capital growth over the past 15 years.”
Cotality’s head of research, Eliza Owen, said the high premiums families are paying not only reflect the value placed on getting into top public schools, but also the proximity to key infrastructure like train stations.
“As affordability has worsened in many good school catchment areas, this may have contributed to a spillover in demand outside of the zones, leading to lower total capital growth,” she said.
“In many cases that means the premium has trended lower over time.”
Cotality quantitative analyst, Irene Kang, noted that in some cases, premiums in popular high school catchments were not always higher than the prices outside the catchments in the same suburbs.
“Houses in the catchment of the 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,” she said.
However, when compared to the costs of private schooling, the report revealed buying into a public school catchment could be a long-term saving.
Futurity Investment data revealed the average cost of 13 years of private education in Australia was estimated at $349,000 in 2022.
At some top Sydney private schools, the cost of secondary education is estimated to be around $276,000 per child.
“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.”