The latest research by the Nationwide suggests that you could pay a premium of up to £8,000 to buy a house in the catchment area of a good primary school. The building society looked at the impact on house prices of the local primary school having 10% more 11 year-olds, who achieved a level four or above, in their key stage 2 Standard Assessment Tests (SATs), than surrounding schools. Its findings suggested that you will pay between 2.6% and 4.6% if the property is close to such a school, depending on where you are in the country.
House prices in all regions were higher if they were near a good school and the average was a premium of 3.3%, or £5,860 across the country. Properties in Yorkshire and Humberside gained the most value in this way (4.6%), whilst those in the south-west saw the smallest average gain (2.6%). The capital saw the highest gain in monetary terms with properties being £8,031 more valuable in the catchment area of a good primary school.
Commenting on the building society’s findings, Nationwide chief economist, Martin Gahbauer said: “Following recent revelations around the lengths that some parents are prepared to go to get their child a place at a good school, we have revisited our research, examining how property prices are influenced by the performance of local schools.” The premium that people are prepared to pay to get their children into a good school has gone up; when the Nationwide last carried out this research, in 2004, the findings suggested that the average gain was 2.5%.
However, to put these findings into perspective, the financial impact of owning property near a good school is outpaced by home improvements such as a loft conversion, which can add up to 20% worth of value to your home, if done properly. Other improvements projects such as creating an extra bedroom or adding 10% onto the total floor space can add 11% and 5% extra value respectively.
The Royal Institute of Chartered Surveyors (RICS) disagree with Nationwide’s findings on homes in the catchment area of a good school; it says that the impact on house prices is more pronounced, putting 8% on the average house price. Although, slightly dated, a study by the London School of Economics in 2003 found that if you were able to take the average house from the worst primary school catchment area and move it into the catchment area for the best school, it would increase in value by an amazing 34%. The same study, when applied to secondary schools decided that the average house would increase in value by 19%.
You may ask if it would be cheaper to send your child to a private school than up sticks to get into the state school of your choice. With fees at an average of £8,100 per year, the answer is a fairly emphatic no. However, a study by the Economist magazine suggested that children leaving private schools in the 1980s and 1990s, on average, earned 35% more in life than those who attended state schools, with parents receiving a 7% return on their investment. Food for thought.