But higher house prices in top catchments do not always yield better returns, study finds
Families in Sydney and Melbourne are paying up to $1.3 million more for properties located within popular public school catchment areas, though the data suggests that these higher purchase prices do not always translate to superior long-term capital growth.
Cotality’s custom boundary analysis compared house values inside high-demand public high school catchments with similar properties in the same suburbs but outside the designated zones. The findings indicate that while many buyers pay a premium to secure a place in sought-after school areas, this does not consistently result in higher returns over time.
“In some of the most in-demand school zones, families are paying hundreds of thousands – and in one case more than a million dollars – more for a house compared to similar houses outside the boundary,” said Eliza Owen, head of research at Cotality.
The largest price difference was recorded in Sydney’s North Shore, where homes within the combined catchments of Killara High, Willoughby Girls, and Lindfield Learning Village had a median value nearly $1.3 million, or 39.8%, higher than comparable homes outside the catchment. Despite this, houses in these zones saw lower capital growth of 126% over 15 years, compared to 150.3% in neighbouring markets.
In Melbourne, properties in the catchments for Princes Hill and University High School attracted a premium of $357,000. Yet, capital growth in these areas was 82.6% over 15 years, trailing the 106.1% growth seen in surrounding suburbs. Of the nine school catchment clusters reviewed across both cities, seven showed higher median house values inside the catchment, but six of these also posted weaker capital growth over the same period.
“These premiums may reflect the value placed on getting into top public schools, but it could also reflect an array of other factors like proximity to train stations, or the high incomes of those living inside the catchment area,” Owen said.
“As affordability has worsened in many good school catchment areas, this may have contributed to a spill-over in demand outside of the zones, leading to lower total capital growth. In many cases, that means the premium has trended lower over time.”
The analysis also identified catchment zones where house prices were lower than those outside the boundary.
“Houses in the catchment of the Cherrybrook Technology High School were $155,000 lower than outside the catchment in the same suburbs, while houses in the Doncaster Secondary College catchment were $48,000 lower than those outside the catchment,” said Irene Kang, quantitative analyst at Cotality.
For many households, paying a premium to live in a high-performing public school catchment may still be less expensive than private education. Futurity Invest estimates that the average cost of 13 years of private schooling in Australia was $349,000 in 2022, with higher fees in Sydney and Melbourne. Some leading private schools in Sydney charge more than $46,000 per year, putting the total cost of secondary education at around $276,000 per child.
“In six of the nine regions we analysed, the house price premium within public school zones was at least $100,000,” Owen said. “While that’s a significant upfront cost, it could end up saving families money when compared to paying for private schooling over many years.”
Unlike school fees, which typically increase over time, mortgage repayments often decrease in real terms due to inflation, making a one-off investment in location potentially more cost-effective than ongoing tuition costs.
“For young families juggling tough decisions around housing and education, paying the premiums could be worthwhile,” Kang said. “After all, private schooling costs can be in the hundreds of thousands, while a good state school catchment could deliver decent returns from both a housing and educational perspective.”
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