Recent research has highlighted that families in Sydney and Melbourne are facing substantial house price premiums when purchasing homes within desirable public school catchment areas, sometimes exceeding $1.3 million. The study by Cotality contrasted property values inside these coveted catchments with similar homes located outside the zones, albeit within the same suburbs.
While it’s evident that there’s a significant price difference for homes in school catchments, the analysis noted that these properties often do not achieve the same long-term capital growth as those outside the catchment areas. Eliza Owen, head of research at Cotality, indicated that in some of the most sought-after school zones, families might pay hundreds of thousands more—up to $1 million or more—compared to nearby homes that do not fall within the catchment. For example, in Sydney’s North Shore, homes served by Killara High, Willoughby Girls, and Lindfield Learning Village had a median value strikingly higher by nearly $1.3 million, which is an increase of 39.8 per cent more than houses just outside the catchment.
Surprisingly, properties within these high-demand zones showed lower long-term growth rates of 126 per cent over the past 15 years, compared to 150.3 per cent in adjacent markets. In Melbourne, homes within the catchments of Princes Hill and University High School commanded a premium of $357,000 yet experienced lesser capital growth—82.6 per cent versus 106.1 per cent in surrounding areas—over the same period.
The analysis surveyed nine school catchment clusters across Sydney and Melbourne, revealing that seven exhibited higher median values than their out-of-catchment counterparts. However, it was found that six of those also experienced lower capital appreciation in the last decade and a half. Factors contributing to the price premium may include not only the prestige associated with elite public schools but also attributes such as proximity to transport links and the affluence of residents within these catchment areas.
As housing affordability declines, families may be prompted to seek properties outside catchment zones, which leads to increased demand and a corresponding boost in capital growth in those areas. Interestingly, not all sought-after school catchments commanded a premium, and for some families, investing in a home within a good public school zone could represent a more economical choice compared to the high costs of private education. In fact, data from Futurity Invest suggested that the average expense for 13 years of private schooling in Australia reached approximately $349,000 in 2022, with even higher costs evident in urban centres like Sydney and Melbourne.
In six of the nine regions analysed, the premium for houses within public school zones started at $100,000 or more, presenting a considerable upfront cost that might ultimately be offset by savings in educational expenses over time, especially as school fees are projected to rise. Conversely, mortgage payments tend to diminish in real terms due to inflation, further influencing the decision for families contemplating their housing options.