As the new school year gets underway, it seems timely to revisit the well-oiled notion that schools are an instrumental driver of local house prices.
If a property is located within a popular local school catchment, this is often one of the first attributes to be included on agents’ sales particulars, even before how many bedrooms the property has. But, how much more are home buyers prepared to pay to live close to an outstanding school? What impact does that Ofsted rating really have on local house prices?
Our analysis uses Land Registry data for property sales completed in 2016 and 2017 (to present), which totals over 860,000 transactions. Meanwhile, the DfE secondary school database has been cross referenced with Ofsted which totals over 3,200 schools. Average house prices have been calculated for bandings of 1, 2, 3, 4, and 5 miles from each school dependent on whether or not the latest Ofsted report for the school was graded outstanding. On this occasion, we have excluded London from this analysis since the closer proximity of schools together means that the distance bandings tend to overlap and affect the analysis.
The results of our analysis reveal that there is a definite price premium associated to homes close to outstanding schools. Properties located within one mile of an outstanding secondary school since the beginning of 2016 have sold for, on average, 20% more than properties within one mile of other schools across England, excluding London. This equates to an average premium of almost £47,000.
We have broken the analysis down by property type and the highest premiums paid to live closest to outstanding schools are for detached houses. Since the beginning of 2016, buyers have paid, on average, 28% more to live in a detached house within one mile of an outstanding school compared to within one mile of a non-outstanding school. This means buyers have had to find an extra £88,000.
Overall, the price premium drops off after one mile except for detached and semi-detached houses. Buyers of these homes are still prepared to pay a premium to live within one to two miles of an outstanding school. For detached homes this equates to 10% or an additional £35,000 and for semi-detached homes the premium is 7% or just under £14,000.
Buyers in the East of England pay the highest premiums overall for living close to outstanding schools. Since the beginning of 2016, properties within one mile of an outstanding school have sold, on average, for 46% more than those within one mile of other schools, a price premium of almost £117,000.
So, with applications for next year’s students set to close before Christmas, home owners living close to an outstanding school but whose children have flown the nest may find it a lucrative time to sell.