Understanding the impact of school zones

June 2, 2015

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For many property investors, school zones are on the radar. If you’ve been browsing any real estate listings lately, you’ve probably noticed that desirable school zones are listed as a main feature.

A good school zone can boost property values by up to 20 per cent, according to some valuers. But is this a trend that is set to continue, and how do these zones really affect property prices?

The case for looking at school zones

There are certainly benefits to looking at good school zones as part of your investment strategy. Parents will always want to send their children to a high quality school, which puts a good school zone at the top of the list of attractive features in a property. In recent years, parents have had greater access to performance metrics, which helps set apart high-performing schools from their less desirable counterparts. Armed with this information, families are able to look for homes in a desirable school zone. With the growing cost of private school tuition, there’s a higher demand than ever to get a child’s foot in the door of a quality public school. Parents want to move to the catchment areas of these high quality schools, and will pay for the privilege. As a result, properties in the right school zone will continue to experience a high demand, with investors being able to reap the benefits in the form of high rental returns.

Potential pitfalls

One factor to consider before investing is that school reputations are not made overnight. Although a property may be desirable due to its zoning, it likely has been so for quite some time, so the school zoning may have little effect on its capital growth. It’s also not generally recommended to make an investment based on a single factor like school zoning alone. Be sure that the property has more going for it, because zones can always change along with school reputations. Only houses located on the inside of boundary lines are considered to be in-zone, and zones may be amended. Finally, keep in mind that if you want to successfully invest in a good school zone you’ll probably need to be able to afford a larger family home to accommodate a growing family.

The bottom line

School zones certainly have an impact on a property’s value, and if you can afford to invest in a property in a desirable catchment area you will benefit from a high tenant demand. Parents pay attention to school performance ratings, with more information now available than ever on local ratings sites. If a school has a high rating, it will drive up the home prices in its school zone. For investors, this can yield high rental returns as well as capital growth. The only thing to bear in mind is that you should look at factors beyond school zones alone to make the most lucrative investment. Be sure that there are other reasons why someone would want to move to this area, be it a good public transportation system or thriving local shops and restaurants.

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