£34,000 extra to live near top state schools
Filed under: House Prices
The premium they have to pay for having a home close to the best state schools (£33,631) is almost three times the average annual private school fee of £11,422, according to new research by Lloyds TSB. Is it worth paying this huge premium?
House prices in the postal districts of the top 30 state schools in England – defined as those secondary schools that achieved the best GCSE results last year – were, on average, £33,631 (or 12%) higher than neighbouring areas in their county.
The typical price of a home in the areas with the best state schools has reached £303,902. This is nearly a third higher than the average house price across England of £236,321, and equates to almost nine times average gross annual earnings. Compare that with the average home across England costing 6.9 times average annual earnings.
Suren Thiru, housing economist at Lloyds TSB said: "In general, homes close to the nation's top performing state schools command a significant premium over neighbouring areas. The presence of a good school appears to help support property values in many of these locations as parents compete with other buyers and investors to land the property that gives their child the best possible chance to attend their chosen school.
"The downside of high property values in many of these areas is that it can create a financial barrier to attending the best non-fee paying schools, with many lower and middle income families finding it very difficult to purchase a home in these locations."
Is it worth buying in these areas?
Lloyds' comparison with the average private school fee of £11,422 is skewed as this is an annual fee and a secondary education takes half a dozen years.
Research shows that education is still worth investing in - unless your kids go on to do a liberal arts degree at an expensive college. Chances are they will end up teaching or in another relatively low-paid job.
Sending your children to a good state school increases their chances of getting into a prestigious university and enhancing their lifetime earnings while you pay nothing for their secondary education. This means the £34,000 average house price premium is well worth paying for. That's why the switched-on middle classes are forking out the extra money - those that can afford it.
However, some housing premiums are just silly. A fifth of areas close to the top 30 state schools command a premium of more than £100,000. Homes in the postal district of the Henrietta Barnett School in north London have the largest premium, with homes costing 91% (£394,282) more than those in neighbouring areas. A typical property here costs £827,496 – almost 19 times average earnings in the area.
The school became the top girls' state school in the country at A-level this year and the school with the highest proportion of A* grades. The GCSE results were also among the best in the school's history.
Homes within the postal district of Dr Challoner's Grammar School in Amersham are the next most expensive with an average house price of £494,654. The school was also celebrating its GSCE results this year, with 100% of the 181 boys in year 11 getting at least five A* to C grades including English and maths.
Homes within the postal district of the Altrincham Grammar School for Girls command the second highest premium in England with house prices in this Cheshire postal district (WA14) trading at a premium of 74% (or £148,516) to the county average. Homes cost 13 times average earnings. Also bucking the national trend of falling GSCE results, 100% of girls in Year 11 at the school passed five subjects, including English and maths, at A*-C and 99% of all exams were graded A* or B.
But there are cheaper options (apart from renting). At the other end of the scale, homes in the postal district of Lancaster Girls' Grammar School are the least expensive with an average house price of £141,088. This equates to 4.5 times average annual earnings, making them the most affordable.
And in the south west of England homes that are in close vicinity to the best performing schools trade at a discount (-16%) to neighbouring areas. There is also a discount in the East Midlands (-6%).
While you might expect London and the south east to be expensive, it may come as a surprise that the housing premium for the top state schools is highest in the north west.
Houses in postal districts of the top ten state schools in the region cost 28% (£43,437) more than the average house in the county. This is followed by the north of England where house prices near the top schools are almost a fifth (18%) higher than their county average.