Fact: Good schools push up prices
Commenting on the figures Martin Gahbauer, Nationwide’s chief economist, 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.
"In deciding on a location for their family, parents can place a great deal of focus on the level of education that the local school can provide for their children when growing up. Primary school catchment areas tend to be relatively small and are driven by proximity to the school. Therefore, one might expect that families would prefer to live near high performing schools and be willing to pay a premium for this. Using the Nationwide House Price Index and the Primary School Performance Tables published by the Department for Children, Schools and Families (DCSF), we have assessed how property prices vary in relation to the proportion of 11 year olds achieving Level 4 or above in their Key Stage 2 Standard Assessment Tests (SATs) at the nearest school. Our figures suggest that a 10 per cent increase in the SATs pass rate at the nearest school adds on average 3.3 per cent to the price of a typical house, while in some regions of the country the premium can even exceed four per cent.
Region Average Price
(Q3 2009) per cent premium for 10 per cent increase in SATs pass rate Price premium for 10 per cent increase in SATs pass rate
North 116,051 4.5 per cent 5,190
Yorkshire & Humberside 134,584 4.6 per cent 6,124
North West 137,890 3.3 per cent 4,507
East Midlands 133,973 2.9 per cent 3,893
West Midlands 142,969 3.6 per cent 5,173
East Anglia 159,223 3.3 per cent 5,320
Outer South East 188,701 3.1 per cent 5,835
Outer Metropolitan 227,208 3.4 per cent 7,821
London 268,847 3.0 per cent 8,031
South West 178,208 2.6 per cent 4,557
England 176,611 3.3 per cent 5,860
"We have isolated the specific impact school performance has over and above other property characteristics, such as property type, size and local neighbourhood type. Across England, an otherwise identical property will command a premium of 3.3 per cent (nearly £6,000), if the local primary school has a 10 per cent higher pass rate. This is a slight increase from the 2.5 per cent premium revealed in our 2004 special feature. Yorkshire & Humberside continues to attract the greatest percentage premium for better performing schools, with a 10 per cent improvement in pass rate adding as much as 4.6 per cent (over £6,000) to the price of a typical property in the region.
"The South West attracts the smallest percentage premium for school performance, with a 10 per cent improvement in SATs scores adding 2.6 per cent (around £4,500) to the price of a typical property.
"The Outer Metropolitan region has seen the greatest increase in primary school performance premium since our 2004 feature. A 10 per cent improvement in pass rate now adds 3.4 per cent (approximately £7,800) compared with 2.3 per cent (£4,900 at the time) previously.
"For the vast majority of primary schools in England, at least 70 per cent of pupils achieve their SATs at Level 4 or above, while 30 per cent of schools have an average attainment rate between 90 per cent and 100 per cent. 2.4 per cent of primaries in England had a 100 per cent attainment rate (at Level 4) in the latest SATs. A house located near one of these top performing schools could command an 11 per cent premium (around £19,500) over an identical property located near a lower quartile school (in the bottom 25 per cent).
"So, how does local primary school performance compare to other features that impact property prices? A 10 per cent higher rate adds more to property value than a second bathroom, but somewhat less than a 10 per cent increase in floor area. Other more substantial improvements, such as a loft conversion, can add as much as 20 per cent to a property’s value.
"On balance, the extent to which primary school performance affects property prices will depend upon the range of schools in the area and whilst it is something that parents are likely to consider when buying a home, it is just one of a number of factors that impact house prices."
Date: 25th, November, 2009
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