High performing schools add value to house prices
High performing primary schools add value to property prices across all regions, according to the Nationwide Building Society.
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% increase in the SATs pass rate at the nearest school adds on average 3.3% to the price of a typical house, while in some regions of the country the premium can even exceed 4%.
"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% (nearly £6,000), if the local primary school has a 10% higher pass rate. This is a slight increase from the 2.5% premium revealed in our 2004 special feature. Yorkshire & Humberside continues to attract the greatest percentage premium for better performing schools, with a 10% improvement in pass rate adding as much as 4.6% (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% improvement in SATs scores adding 2.6% (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% improvement in pass rate now adds 3.4% (approximately £7,800) compared with 2.3% (£4,900 at the time) previously.
"For the vast majority of primary schools in England, at least 70% of pupils achieve their SATs at Level 4 or above, while 30% of schools have an average attainment rate between 90% and 100%. 2.4% of primaries in England had a 100% attainment rate (at Level 4) in the latest SATs. A house located near one of these top performing schools could command an 11% premium (around £19,500) over an identical property located near a lower quartile school (in the bottom 25%).
"So, how does local primary school performance compare to other features that impact property prices? A 10% higher rate adds more to property value than a second bathroom, but somewhat less than a 10% increase in floor area. Other more substantial improvements, such as a loft conversion, can add as much as 20% 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."