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Being ‘in the zone’
September 21, 2012
Despite median prices dropping across our capital cities, life isn’t getting any easier for one sector of the real estate market. As we approach the end of the year, families wanting to enrol their children into a reputable inner city school, are facing limited options accessing suitable accommodation within restrictive ‘school zone’ areas.
School zones are ‘hot property’ in the real estate fraternity
If you analyse the statistics, being in a school zone for one of the top 20 or so government schools in Melbourne, can increase the price of properties in the area at the very least 10 to 15% – and the smaller the zone, the greater the pain. Hence why there’s a strong connection between the top public schools and the price of residential property. Add onto this property taxes and other costs associated with moving into a school zone initially, and perhaps the only thought a family can comfort themselves with during the early hours of a sleepless night, is the ‘nest’ egg they’ll be left with once the kids leave home and they eventually decide to sell and ‘downsize’.
Rental yields for family accommodation are also significantly inflated for properties located in a popular school zone, providing an attractive incentive for investors seeking good growth and yield. Neither is it unheard of, for an old property within the neighbourhood to be rented by a ‘desperate’ family never intending to move in, but simply using the address to meet the criteria for enrollment into year 7. I’ve even heard of school principals ‘camping’ out early mornings and late into the evening, to assess the level of activity in a property ‘suspected’ of sitting vacant whilst the family lives elsewhere. School zones are without doubt ‘hot property’ in the real estate fraternity.
New suburbs are not adequate
It’s also worrying that newer suburbs created with the intention of increasing the provision of affordable family sized accommodation, are woefully inadequate in their application principally because they often have little more than a small ‘village sized’ primary school servicing the area.
At worst, it results in a significant ‘disconnect’ for families spilling into fringe areas and consequently suffering unintentional discrimination as they are unable to easily access suitable educational facilities due to their choice to move ‘out of town’ to find both affordable and appropriately sized accommodation in the first place.
As a case in point, earlier this year Melbourne’s State Government announced the development of six new fringe suburbs – Diggers Rest, Lockerbie, Lockerbie North, Manor Lakes, Merrifield West and Rockbank North which are planned to accommodate no less than 100,000 ‘new’ residents. Planning minister Mathew Guy made a point of stressing these suburbs would be ‘adequately’ planned and facilitated with appropriate infrastructure and I don’t doubt the goodness of his intentions. Currently there are barely a handful of small local primary facilities servicing the area.
Bubble effect on real estate prices
Earlier this year, the Herald Sun flagged a concern citing “220 government schools” in Victoria alone turn away local families due to pressures of capacity. According to reports, 224 primary and secondary schools across Melbourne now have specific zoning and district restrictions.
The unfortunate ‘bubble’ effect on real estate prices in well established popular and restrictive school boundaries is an issue of concern especially when school zones are either reduced or extended based on under, or over capacity. Should a recently purchased property suddenly be placed ‘outside’ the zone – it would result in an instant loss of equity to the families ‘nest egg’. The same would result if a school moved or for some reason closed. Mowbray College in Melbourne – recently forced into administration – is one such example. A family home, previously marketed as being ‘walking distance’ to the college, could no longer carry this attraction.
Furthermore, housing in school zones tends to be held for longer periods – period’s lasting ‘at least’ the length of a child’s secondary education and often beyond. Issues of supply are therefore at the forefront of concern for families hoping to move in and get a bite of the educational ‘cherry.’ And whilst school zoning may protect against over capacity thereby ‘keeping kids local’, it also restricts some families to either the local state facilities – good or bad – unless they are prepared to ‘up-sticks’ and move, or pay for private tuition.
So what is the solution?
In an era of stricter lending requirements, sky high debt to household disposable income ratios, and what could promise to be an era of long term economic uncertainty, it is vital we teach young ‘potential’ home buyers how to minimise risk and save before they spend.
It would also be nice to think the new “Australian dream” would evolve around the vision that ‘no one’ in 2050 should be hitting their 30’s living ‘wage to wage’ – with little idea where their super goes and no long term financial plan.
However, in order to achieve the above, a good education is required – and whilst I’m in no way suggesting that a child not attending a good school will never be a property owner. I’m making a point for the perception that accessing quality education is causing families substantial pressures of affordability.
It subsequently leaves the question – do we do away with school zones all together – encouraging a greater competitive environment between educational institutions?
Increase the number of education facilities in ‘poorer’ suburbs and in doing so, meet the demands of teachers by pouring greater funding into the education coffers?
Encourage financial literacy, real estate acquisition, and critical analysis within every school curriculum?
I have no answer – however there does seem to be a case for highlighting the unfortunate social divide between accessing quality education and the consequential ‘bubble’ prices of accommodation in popular school zones.