The Importance Of School Zones & How They Affect Property Prices
In This Week’s How's The Market | Edition 61
Avoiding Costly Mistakes: What to Prioritize in Your Property Search
The Ultimate Wow Factor
Another 19 Year Old Purchased With Grants & No Help From Mum & Dad
The Importance Of School Zones & How They Affect Property Prices
When we first chat with clients, we always stress that the most important thing to get crystal clear on is their brief. As the only way you can reverse engineer a great result is from seeing what the perfect result actually looks like for them.
We start by giving them a list of property attributes including things like distance to public transport, natural light, and a separate study and encourage them to separate all attributes into ‘nice-to-haves’ and ‘must-haves’.
To no surprise, oftentimes the number one ‘must-have’ on many people's lists is being in the right school zone.
So how much can being in a school zone cost and is it worth it?
Domain Groups 2023 School Zone Report found that annual house price growth in 50% of primary and 47% of secondary school zones have surpassed their respective suburbs, with most seeing up to 10% more growth.
As an example, the Alphington Primary School zone jumped 28% annually while Fairfield Primary School increased a fraction of this, at 5%.
Why are school zones becoming more important than ever?
Students who live inside the zone must be accepted into the school, and while parents can apply from outside the boundary on special grounds there’s every chance they’ll be knocked back.
Some of the most in-demand public school zones are becoming more strict as the suburbs they live in are becoming more dense. What was once a large block with a single 3-bedroom house, may be knocked down and built into 3 4-bedroom townhouses.
Investors are also well aware of the increased capital growth provided by school zones as well as the increased rent that parents are willing to pay to live in such zones which only helps contribute to higher prices.
Is paying a premium worth it?
To many families, yes. Many parents will weigh up sending their children to private schools instead, however, with some private schools charging $30,000 or more per child per year, plus uniforms and extras, it can cost hundreds of thousands of dollars per child just for their education.
Hundreds of thousands of dollars that could be spent paying down a mortgage in a higher-growing region.
All whilst some public schools still outperform some of their private school counterparts.
So when you consider the additional capital growth, higher rental demand, potential better education and the opportunity of spending more money paying down a mortgage instead of private school fees, you can see why it is so enticing to some parents.
So how do I know how to find out the school zones?
There is a very easy way to see if the potential property you are researching is in the zone as well as creating a property brief based on school zones.
Head over to https://www.findmyschool.vic.gov.au and you can type in the address of the property you are looking at, or type in the school you wish to be in the zone for and it will draw a boundary on a map.
What The Agents Are Saying
Get ready for spring!
In my conversations with agents this week, nearly every agent I spoke to was showing me off markets.
Something that has been much harder to come across over the last few months.
Some agents are cautious of what the stock will do to house prices and the marketplace, especially in the outer suburbs like Berwick to Pakenham and Croydon to Lillydale.
However, agents in the suburbs including Glen Iris, Ashburton, Camberwell and Hawthorn are optimistic about house prices increasing as they have seen such little stock on the market in recent months with huge demand.
The Wow Factor!
3 Avalon Road, Armadale, Vic 3143
It’s not often you see an indoor basket ball court on a 1187m2 Edwardian in Armadale 🤯
Plus a fireplace in the ensuite?
Price Guide: $15,500,000 - $16,500,000
In The Media
Mortgage Wins: lender helps 19-year-old buy first property
Lender Helps 19-year-old Buy First Property
Josh had expressed interest in becoming a property owner to his lender but didn’t think it would be possible with just enough for a 5% deposit.
However, the pair put a strategy in place for Josh to secure his first home using the first home guarantee scheme with a 5% deposit. The first home guarantee scheme allows a borrower to use a 5% without paying Lender Mortgage Insurance.
LMI is often a hidden cost that not many people foresee. LMI is required when a loan-to-value ratio is greater than 80%. In other words, you are using less than a 20% deposit.
LMI can be anywhere between $15k all the way up to $100k so a huge win for Josh.
I think the biggest takeaway from this is that you should just be entering the market as soon as possible. I’ve said it once but ill say it again your first home is not your forever home. It should be a stepping stone to future investments.
Josh has now put his best foot forward for a very bright financial future. A 5% loan on a $500,000 property is just $25,000. A couple of hard years of saving and you could be in your first just like Josh.
Final Thoughts
Spending additional money to get into a premium public school zone might be a better investment that you might have initially thought.
Consider the alternative costs of private school fees and how much it would cost over the entire secondary education period if you had one or two kids, as well as the opportunity cost associated compared with a higher compound growth rate on a premium public school property!
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
