Do School Zones Impact House Prices?

Popular school zones are considered a big driver of house prices, but it is hard to pinpoint exactly how much additional value is due to the zone alone, experts say.

While no-one doubts the positive impact a good school zone can have on an area, new CoreLogic figures suggest price rises across a zone tend to reflect the broader fortunes of the area.

The property research company looked at the median price of properties by school zone across the country and the yearly change back to 2012.

It found that the 10 school zones with the highest median prices nationwide are all in Auckland suburbs that are considered premium anyway.

Properties in the Victoria Avenue School zone, which is in Remuera, have the highest median price at $2.58 million.

Rounding out the top five are properties in the Ponsonby Primary School, Westmere School, Churchill Park School (in Glendowie), and Richmond Road School (in Ponsonby) zones with medians of $2.53m, $2.47m, $2.46m, and $2.38m respectively.

These prices are well above the Auckland region’s current median of $1.19m, but below the current suburb medians for Remuera ($2.70m), Ponsonby ($2.65m), Westmere ($2.82m), and Glendowie ($2.39m).

CoreLogic’s figures also show that of the 10 school zones which had the biggest five-year increases in median price, seven are in Gisborne.

The Gisborne market had particularly strong price growth during the boom in 2020 and 2021, and now has a regional median price of $642,000. But properties in only one school zone have a median above that.

There is more geographic variety in the 10 school zones with the biggest 10-year median price increases, but it is the Sir Edmund Hillary Collegiate Senior School zone in Otara in Auckland where they went up most.

Since 2012, prices in the school’s zone have increased by 229% to a median of $845,000. Otara’s median is $853,250, which is still well below Auckland’s median.

CoreLogic head of research Nick Goodall says the figures are a bit surprising, and may reflect the smaller catchment size of primary school zones.

High school zones have bigger catchment areas, and encompass several suburbs, which makes a difference, he says. Median prices in the sought-after Auckland Grammar and Epsom Girls Grammar zones are higher than the regional median, at $1.56m and $2.04m.

“But the zones with the highest growth rates over the last five to 10 years reflect the fact that areas with lower-priced properties had larger percentage increases in prices over recent years.

“That is because a $2000 increase on a cheaper property will have a bigger impact than a $10,000 increase on a more expensive property.”

It is important to acknowledge the price increases may have nothing to do with the school zoning and may just reflect growth of the broader area that they are in, Goodall says.

“School zones are important and influence decision-making around property purchases, but it is hard to separate out how much a good zone adds to an area’s prices.

“When it comes to prices, there are many other factors that come into the equation, such as the types of properties available, the area’s amenities, and its wider attractions, such as views.”

The most sought-after school zones tend to be in more desirable areas, and so are likely to be just one of the factors that make the area’s median price higher, he says.

In 2018 research from the Auckland Council chief economist’s unit showed that in the Auckland region, if all else was equal, a house in a decile 10 zone would be sold for around $225,000 more than an identical house in a decile 1 zone.

But Opes Partners’ economist Ed McKnight says that there are so many variables between different areas it is necessary to compare the sale prices of identical houses on the same street, but in different zones, to establish the impact of a zone on price.

He tried to do this with Upland Road in Remuera where one side of the street is in Auckland’s double-grammar zone, which includes Auckland Boys and Epsom Girls Grammar, and the other side is not.

But there were not enough sales on both sides of the street over the last year to get a substantive finding, and that makes it difficult to split out the zone premium from other factors, he says.

“Focusing on the double-grammar zone, my analysis shows there may be a price premium when buying in to the zone, because sought-after zones seem to be in higher value areas, but that premium does not increase much over time in terms of capital growth.

“Over the last 30 years, capital growth across the Auckland region on average has actually performed slightly better than it has in the double-grammar zone.”

That suggests that if someone buys a property in a sought-after school zone there will not be a proportionally greater, and quicker, increase in value compared to other areas, he says.

But Ray White Lochore’s Birkenhead manager Chris Gemmell has a different view, and thinks school zones are a critical factor in the value of a property, and do have an impact on an area’s prices.

Education, particularly at high school level, is increasingly important to many buyers, who are thinking about their kids’ futures, and access to a strong school zone carries a lot of weight in the decision-making process, he says.

“The growing population, and expanding school rolls, means some schools have started enforcing their zones more strictly, and that creates a powerful boundary around an area.

“It acts as a pressure point for people wanting to buy into the area, and if there are not enough properties available, demand outstrips supply rapidly. That puts upwards pressure on prices, so they do impact, but it is hard to quantify how much.”

For people selling, good zones are a great marketing factor and help to make a property more desirable to a wider pool of potential buyers, he says. “The more attractive features a property has, the more it helps to create competition, and get a better price for the seller.”

One thing to be aware of is that zones do change sometimes, and the situation around a school can change which makes its zone less attractive, Gemmell adds. “If this happens, there can be a drift away from buyers as demand shifts, and that can affect prices in a more negative way.”

For Century 21 New Zealand owner Tim Kearins, school zones play a significant role in most families’ assessment of a property, and they help to hold a property’s value when the market is softer, as it is at the moment.

“Desirable school zones have a measurable impact on a property’s value, and a good agent will know all about the zones and their boundaries, as it is a common question from prospective buyers who want confidence and clarity on this from the outset.”

But it is not just about house sales, as a good zone is also good for a property’s rental prospects, and can affect the price of rentals enormously too, he says.

“Our property managers are noticing a lift in inquiries from prospective tenants as parents try to get their kids accepted into certain schools for 2023.”