The Secret Factor That’s Making Some Homes $1.3 Million More Expensive Than Others in the Neighborhood

New research has revealed that families are paying up to $1.3 million more for homes inside popular public school catchments in Sydney and Melbourne.

The study conducted by Cotality assessed property prices for residences located within highly desirable school catchment areas and compared them with similar properties located outside those zones but still within the same neighborhood.

It was evident that homes within the catchment areas commanded higher prices; however, these properties did not consistently offer substantial long-term capital appreciation.

For instance, in Melbourne, homes in the catchment areas for Princes Hill and University High School showed a premium of $357,000. Yet, capital growth was less impressive than that of nearby areas, with rates of 82.6 percent versus 106.1 percent over a 15-year period.

Of the nine school catchment clusters analysed across Sydney and Melbourne, seven had higher median house values compared to out-of-catchment homes. However, six of these also recorded lower capital growth over the past 15 years.

“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.

“As affordability has worsened in many good school catchment areas, this may have contributed to a spill-over in demand outside of the zones, leading to lower total capital growth. In many cases, that means the premium has trended lower over time.”

And house prices in some popular school catchment zones did not command a premium at all.

Cotality found the higher purchase price in many catchments could represent a saving for some families, however, compared to paying for a private education.

According to Futurity Invest, the average cost of 13 years of private education in Australia was estimated at $349,000 in 2022, though that was significantly higher in Sydney and Melbourne.

“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.”

Additionally, school fees are likelier to rise over the years, while mortgage payments can decrease in real terms due to inflation.