How much does the address really matter when you buy a property?

Buying any property means you’re also buying its location, so it’s crucial that you take note of any landmarks, amenities or unique features of the neighbourhood before you sign the contract.

Knowing your neighbourhood includes finding out whether or not you’re within public school catchment areas, which may contribute to changes in your property’s value. Your property’s value is not limited to the price on the listing, or the handful of costs associated with buying it. A property’s value is an accurate assessment of a property’s worth, which you can find by:

• Doing a competitive market analysis: this is a detailed report on a home’s present value, commonly prepared by real estate professionals by comparing sale prices of similar properties in the area, and
• Calculating for the expected appreciation: depending on the location, market condition and situations happening inside the neighbourhood, the value of the home can appreciate over time.

When you buy property near a school, its value tends to be affected by its presence within the neighbourhood. We’ve broken down what it means for any home you buy near a school, and where this puts you in your property investment journey.

What are school catchment areas?

Public school zoning determines that only residents within a certain area may attend the relevant school, which can be a lot more cost-effective than private schools.

People are willing to do a lot to get better value for money when it comes to their children’s education, so school catchment areas affect the movements of families within one city. 

These assigned school zones change regularly to help manage enrolment numbers; changing school zones tends to be controversial when properties are reclassified into different school catchment areas, which could mean students have to go to a school farther away from their homes because of how the lines have changed.

It can be difficult to get your child enrolled in a school outside of your catchment area due to limited capacities, and growing demand for enrolment places at the state’s best schools.

Limited capacities within these catchment areas can make it more challenging to get a child enrolled in a school outside the zone, combined with the growing demand for places at these schools. Generally, some families will lease out their own homes and seek to rent within catchment areas, which can drive up the rates that renters are willing to pay for a property.

Why buying a property near schools can be good for you

Properties near schools enjoy value increases as families move into the catchment areas to access these schools. 

Many families seek to purchase properties within school zones because they see the value in public schooling, or want to channel their resources towards these schools over private ones. Investors, especially those with cash upfront who can facilitate a much quicker transaction, can push prices up at auction. 

Some buyers will begin this process as early as their child’s preschool years, to rent out the property until the target year for their child’s admission into the relevant school. This practice also allows buyers to derive income from the property well before they must live in the home.

While only a few schools in Victoria have specific catchment areas, enough families wanting to do this drives the demand for homes within these areas, and properties within these neighbourhoods appreciate in value consistently as these zones cover only some streets. 

What you’re giving up if you buy a property near schools

Living near schools may translate to some inconveniences for homeowners or renters. 

Buying property within school catchment areas can affect the experience of living in the home. Running out of parking during events, slow traffic when students are being dropped off and fetched plus the possibility of property devaluation in the event of catchment area revision are some of the things you can expect to happen if you end up buying a property near a school.

Along with this, people may buy property for investment alone, further pushing demand. A tightening real estate market may affect your property’s value or experience of selling in the following (but not limited to these) ways:

• There are more inquiries you need to get through: the scarcity of homes within the school catchment area or in closer proximity to a highly-rated school means you may have to deal with as many as 100 inquiries on your property, especially if it’s in a prime location relative to the relevant school,
• You’re facing more costs when you sell later on: higher taxes and new regulatory costs could affect your budget when you let go of the property, whether it’s because your children have finished their studies or your plans include moving to another location, and
• Renters may be staying for longer than you could have initially expected: fewer properties in the market can translate to longer leases, particularly if a renter has more than one child enrolled in the relevant school, so the long-term lease of a few years can well turn into a decade.

Additionally, as more investors enter the property market through different pathways, investment properties in school zones may take multiple forms. As population growth continues in bigger cities, the image of a detached house as the primary way that investors will get on the property ladder may no longer be accurate. 

Given how buyers will still aim to live where their needs are best met–for some it means close distances to schools, with access to public transportation–they’re willing to give up the image of a single-storey bungalow with a yard. Apartment complexes may well be lucrative properties for investment moving into the future, so this opens up more options for you as an investor. 

Buying homes near schools allows you to reap the benefits of higher chances for property appreciation, with the challenge of having to deal with potentially overwhelming levels of demand for these in-demand spaces. Aside from detached homes, apartments and other higher-density living arrangements present the opportunity for more investment in these areas.

Whether you’re a parent looking to move into a neighbourhood with the best schools or a property investor who just wants to settle somewhere that suits your lifestyle, our real estate agents can advise you on the best course of action. Contact us today and get guidance on where you are better off investing.