Top school zones command big premiums without guaranteeing stronger growth

Buying inside a prized public school catchment can add more than $1.5 million to the price of a Sydney house, but new analysis suggests the premium does not reliably produce stronger long-term capital growth.

Domain reported on Friday that Cotality compared house values inside and outside 10 popular secondary school catchment areas in Sydney and Melbourne. Nine of the catchments had higher values inside their boundaries, confirming that access to a sought-after school can carry a substantial upfront cost.

Only four of the 10 zones, however, recorded stronger growth than nearby areas over the 15 years examined. For families, this means the extra money may secure access to a preferred school and neighbourhood, but should not automatically be treated as an investment advantage.

Premiums vary sharply between catchments

The largest gap in the analysis was across the overlapping Rose Bay and Randwick secondary school catchments in Sydney. Houses inside the zones had a median value of about $4.34 million, compared with $2.78 million outside them — a difference of roughly $1.56 million, or 55.9 per cent.

Over 15 years, values inside those catchments rose 150.8 per cent, only modestly ahead of the 147.4 per cent increase outside.

At the other end of the Sydney results, houses in the Epping Boys High and Carlingford High catchment area carried a 3.2 per cent premium, estimated at $75,211. The Cherrybrook Technology High catchment was the exception among the 10 areas studied: houses inside its boundary were valued 1.9 per cent, or $44,832, below nearby properties outside the zone.

Melbourne’s premiums ranged from 3.2 per cent, or $47,767, for the Doncaster Secondary College catchment to 15.9 per cent, or $266,822, for Glen Waverley Secondary College.

In the McKinnon Secondary College zone, the median house value was about $1.75 million, compared with $1.55 million outside. Yet values within the catchment rose 90.4 per cent over 15 years, while surrounding property increased by 98 per cent.

Why a higher price may not produce higher growth

A school-zone premium can already capture much of the value buyers place on access to the school. When prices begin from a high base, future buyers may have less capacity to keep bidding them upwards.

Cotality quantitative analyst Irene Kang told Domain that affordability constraints appeared to be limiting growth at the upper end of the market. Cotality research director Tim Lawless said more affordable markets had generally outperformed broader capital-city averages.

School access is also not the only factor affecting the figures. Many highly regarded catchments overlap suburbs with strong transport, shopping, coastal access or established prestige housing. It can therefore be difficult to separate the value of the school boundary from the broader appeal of the neighbourhood.

Properties within the same zone will not perform uniformly either. A practical family house close to transport and parks may attract a wider buyer pool than a compromised property that happens to sit on the preferred side of a catchment line.

Buy the education and lifestyle, not a guaranteed return

For owner-occupiers, paying a school-zone premium can still make sense. It may provide access to a preferred public school, shorten daily travel and allow a family to remain in one community for many years.

The financial comparison should include alternatives. These may include buying outside the zone and paying for private education, choosing a different public school, accepting a smaller dwelling within the catchment or purchasing in a neighbouring area with similar transport and amenities.

Buyers should also confirm current enrolment rules directly with the relevant education department and school. A property advertisement or portal map should not be the final authority on whether an address is eligible, particularly where boundaries or school capacity policies may change.

Before paying a premium, compare recent sales on both sides of the boundary. Try to match properties by land size, dwelling type, condition and street quality rather than assuming every price difference is caused by the school.

The central lesson from the Cotality analysis is that school access and investment performance are separate considerations. A catchment can be extremely valuable to a family without outperforming the surrounding property market.

What it means for you

• A school-zone premium may buy access and convenience, not superior capital growth.
• Compare equivalent sales inside and outside the catchment before setting your budget.
• Confirm enrolment eligibility directly with the school or education authority.
• Make sure the home will suit your family for long enough to justify the upfront premium and transaction costs.