How do schools affect house prices?

Property News

Living close to one of England’s top primary and secondary state schools can add over £25,000 to the price of a house.

  • New research finds that property prices in the immediate area around the best performing state primary and secondary schools in England are approximately 7% (£27,000) and 6% (£25,000) respectively more expensive than those in the wider surrounding area

  • Taking average income into account, the region with the lowest house price premium relative to earnings and near a top primary school, is in the North East. For top secondary schools, the lowest house price premium relative to earnings is in the East of England

  • The research highlights the importance of reducing the house price barrier to educational opportunities for children from lower income families; this requires government and business to work together to improve social mobility and ensure opportunities are evenly spread

Houses within the catchment of the top 10% of English primary schools cost around £27,000 more than those in the wider postcode district, while houses near the top 10% of English secondary schools cost an additional £25,000, according to new research from PwC.

On average, house prices near to the bottom 10% of English secondary schools are 5% lower – or £9,000 cheaper – than those in the wider surrounding area and, when in the catchment of the lowest-performing secondary schools, house prices are 7% lower, making them approximately £14,000 cheaper.

This could have an impact on social mobility, the report warns, because less wealthy families could be locked out of the best education, thus affecting their children’s future opportunities.

Jamie Durham, economist at PwC and lead author of the research, said:

“Although access to the top-performing primary schools has slightly improved, the relationship between house prices and secondary school performance has remained largely consistent.

“High house prices around good schools have the potential to lock out poorer families from the best performing schools and, while the amount varies across England, it remains a significant obstacle to social mobility across regions. Concerningly, this can also be compounded over time – children from wealthier families who can afford more expensive homes may do better in school as they can afford additional support, contributing to higher attainment in these schools, and reinforcing the house price premium.”

While Yorkshire and the Humber has the highest house price premium (12%) to live near the best primary schools, the 5% premium in London adds an extra £32,000 due to the capital’s higher house price levels.

In the North East, however, the 5% premium on the house price amounts to £8,000, which reflects the fact that housing is more affordable here than in other parts of England and the availability of places in good schools is potentially better than in other parts of the country. Strikingly, in the South East and South West, it will cost around £34,000 and £21,000 respectively to live near the top 10% of primary schools.

The secondary school house price premium varies more between regions. The largest premium (19%) is in the West Midlands where parents will need to add £47,000 to their house-buying budget in order to get close to the best performing schools. Yorkshire and the Humber has the second highest house price premium (16%), amounting to an extra £41,000.

In London, by contrast, the house price premium to be close to the best performing secondary schools is relatively small at 3%, but due to the capital’s more expensive house prices this is worth about £17,000. Interestingly, in the South and East of England, the cost of houses near the top 10% of secondary schools is only marginally higher than that of properties in the wider surrounding area and, in the East of England, there is no premium, regardless of the proximity to top-performing schools.

Jamie Durham said:

“By comparing the house price premium with average annual income in each region, we have found that the regions with the lowest house price premium relative to earnings near a top primary and secondary school are the North East and East of England.”

We also found that areas with fewer places at top schools have higher high house price premiums, especially in the case of primary schools. Our results show that Yorkshire and the Humber is the most competitive region for places in England’s top primary schools, and the South West is the most competitive region for places in the best-performing secondary schools.”

PwC says a number of steps could be taken to help reduce the house price barrier to the best-performing state schools for children from lower income families in order to enhance social mobility. Long-term actions include improving outcomes in low performing schools, re-assessing the way pupils are admitted, and building more affordable housing near the best performing schools.

In the short term, however, businesses can play an important part by investing in school-leaver schemes and offering apprenticeship programmes to attract a broader intake, including from less affluent areas. PwC, for example, has both a school-leaver programme and was one of the first employers to roll out the Tech Degree Apprenticeship initiative, whereby students combine practical work-based learning with a university degree.

Rob Walker, partner and UK housing lead at PwC said:

“A key way the government could help to address the house price premium is by building more affordable family housing – especially social housing – close to good schools, while of course ensuring that local schools are able to expand sufficiently to cope with the extra demand.

“In addition, they could also incentivise retirees who are holding onto their houses around good schools to consider moving to another part of the neighbourhood. This could be done by supporting the development of good quality retirement properties.”

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