Families are spending substantial sums — sometimes exceeding a million dollars — to purchase homes within the zones of highly-ranked public high schools, as revealed by recent research.
However, a study by the property data company, Cotality, indicates that higher upfront costs do not always translate to better long-term price appreciation.
The research examined house prices in nine sought-after school catchment areas in Sydney and Melbourne.
In seven of these zones, houses located within the catchment were pricier than those just outside the boundaries.
Nevertheless, six of these catchment areas experienced weaker capital growth over the last 15 years.
Eliza Owen, head of residential research at Cotality, said the results confirm what many buyers already suspect, that popular school zones often come with a hefty housing premium.
“These premiums might represent the importance placed on accessing leading public schools, but they could also reflect various other factors such as closeness to train stations, or the higher incomes of residents within the catchment area,” she noted.
The economics of catchment area homes
Homes in the combined catchments of Killara High, Willoughby Girls and Lindfield Learning Village in Sydney’s North Shore held a median value of nearly $1.3 million higher than homes nearby but outside the catchment.
In spite of this trend, homes in the catchment areas showed lower long-term growth of 126 percent over the past 15 years, compared to 150 percent in adjacent areas.
In Melbourne, the premium for homes in the catchments of Princes Hill and University High School reached $357,000.
Capital growth was again weaker than that of the surrounding suburbs, with in-catchment homes growing by 82.6 per cent over 15 years, compared to 106 per cent in nearby areas.
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,” she said.
Not all school zone homes cost more
The report also found areas where homes inside a high-performing catchment were actually cheaper than those outside.
Houses in Sydney’s Cherrybrook Technology High School catchment were $155,000 lower than those outside the boundary in the same suburbs.
In Melbourne, houses in the Doncaster Secondary College catchment were $48,000 lower than those outside the zone.
“For many families, buying into a strong public school zone may still be a more affordable alternative to private education,” a statement from Cotality said.
According to Futurity Investment Group, the average cost of 13 years of private education in Australia was estimated at $349,000 in 2022, with significantly higher costs 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 dollars,” 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.”
