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Getting in the Zone
June 11, 2015
Without a shadow of a doubt, being located close to the best secondary colleges can add big dollars to both the price and long-term capital growth potential of residential property.
Many parents place great value on education and seek locations within walking distance and short commute of schools, with many willing to pay the premium for this convenience. The popularity of high-performing government secondary schools, where eligibility for enrolment is restricted to permanent residents within a set boundary, is further compounding this trend. Take for example high-performing McKinnon Secondary College in Bentleigh, where houses in the school’s zone can easily command up to 15% more than similar properties located just outside the zone.
Where are the “cool” families going?
Properties in the zone of Balwyn High School, Glen Waverley Secondary College, Strathmore Secondary College and University High School also attract zone premiums. Balwyn is a particularly interesting example of an area that commands a zone premium, yet is poorly serviced by public transport. Access to good public transport usually plays a critical role in earmarking an area for property investment, however, in this exceptional case the area’s proximity to aspirational secondary schools drives the area’s premium pricing and capital growth potential.
Private vs public
Even though ‘school zones’ are only officially used by government secondary schools to determine eligible enrollment from the local community, the trend of higher values for property located in secondary school areas is also apparent for well-regarded private schools, which do not have these zone restrictions. Across the board, when comparing the 2014 list of the 90 best performing government and private schools across Victoria (based on median VCE score and percentage of scores of 40 or over) with the sales data of residential property, there is a strong correlation between property values and proximity to Victoria’s best secondary colleges.
Landing on the right investment property is much more complex than just evaluating a property on its proximity to schooling. Government school zones are subject to change so it is imperative that buyers commit careful research to any potential investments before paying a premium. Additionally, properties located on a school’s main access roads often suffer from severe traffic congestion!
Look at the big picture
The astute investor will take the time necessary to evaluate each potential investment on its own merits. Every property should be evaluated on its history of, and predilection towards strong capital growth. And to do this, it’s important to understand the intricacies of what makes a property tick, with proximity to schooling only one consideration of many. Investors should also consider further factors that will positively influence the value of a property including access to good public transport, amenities and community and lifestyle pursuits.
For those who don’t have the time to do the research themselves and want to reduce risk from their investment transaction, don’t hazard everything on a guess and consider using the services of an expert to do it for you.
Greville Pabst is a judge on The Block and the CEO of WBP Property, a leading property valuations and buyers advocacy firm.