Schools and House Prices

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Jan 6 - 2020

How much extra do you need to pay to live near the best state schools?

In our experience, most people with young children and those who are thinking about starting a family have given serious consideration to which areas in London they want to raise their kids.
Almost overnight, being close to the best bars and restaurants suddenly becomes a lot less important than your proximity to nurseries, primary and secondary schools. And it’s not just being near one, or indeed all, of these schools that matters.
An even bigger piece of the puzzle is the quality of education the schools can offer. Parents naturally want to do what’s best for their children, and for many, moving property or relocating to a completely new area in a bid to secure a spot at a highly performing school is a step they will willingly take.
Even if that step adds a considerable amount of money onto the price tag.

Definition - School ranking

The focus of this blog post is on state primary and secondary schools. Our analysis has been informed by the huge amount of useful data published by Ofsted, the Office for Standards in Education and Children’s Services and Skills.
Ofsted is the nationally recognised independent body responsible for inspecting, regulating and reporting on school standards in England.
It rates schools against multiple benchmarks (including the effectiveness of leadership and management, the quality of teaching, learning and assessment, personal development, behaviour and welfare, and outcomes for pupils) before assigning them an overall judgment of Outstanding, Good, Requires Improvement or Inadequate.

The Bricks&Logic Property Index grouped together all of the schools that fail to secure a judgment of either outstanding or good at their most recent inspection into a ‘requires improvement’ category.

Definition - Catchment area

The next term ‘catchment area’ is a bit of a minefield. In theory, every state school has a defined catchment area, but not all schools publicise how theirs is defined. In days gone by, the parameters of a school's catchment areas tended to be quite static, meaning that if you lived within it you could be fairly certain that your child or children would secure a place.
Unfortunately that is no longer the case. Parents now have to grapple with geographical uncertainty alongside any other admissions criteria individual schools choose to set. It gets more complicated still if you happen to live in the catchment area for several schools which tends to be the case in London where housing density is high. In these circumstances, local councils normally allocate school places on a lottery basis, although factors like having a sibling already at the school are considered. In the absence of any hard and fast rules, we have relied on the most recently published catchment area data to perform our analysis.

Locating London’s highest rated schools

We started our deep dive into the data by mapping areas with the highest concentration of Outstanding, Good and Requires Improvement schools.
To do this, we placed each of London’s postcode districts into one of three groups depending on how the Bricks&Logic Index calculated its average property price.

Figure 1 - Primary Schools
Most recent
Ofsted judgement
Bricks&Logic Price Band
Cheapest
Third
Middle
Third
Most Expensive
Third
Oustanding23%29%35%
Good72%67%63%
Requires Improvement5%4%2%
Figure 2 - Secondary Schools
Most recent
Ofsted judgement
Bricks&Logic Price Band
Cheapest
Third
Middle
Third
Most Expensive
Third
Oustanding31%36%39%
Good58%57%52%
Requires Improvement11%7%9%

Figures 1 & 2 show the percentage of state primary and secondary schools achieving an Ofsted judgment of Outstanding, Good or Requires Improvement in each property price band.

For instance, in the more expensive areas of London, there are 12% more Outstanding primary schools and 8% more Outstanding secondary schools than there are in the cheapest band.
This data leads to a very simple conclusion - the more expensive the area you live in, the higher the chances are that your child will secure a place at an Outstanding school.

This finding is supported by the vast majority of analysis already out in the public domain.

One analyst commented, ‘The new figures show that the top 10% of primary schools in London would increase home prices by £38,800, while the average across England for homes near good primaries is £18,600, and £15,800 more for those near good secondary schools.’

Removing location from the equation

As mentioned above, ‘catchment area’ is a difficult term to define as it’s quite possible that children living on the same street could go to different schools. So, to perform this analysis, we looked at those areas where more than 75% of children living on any particular street went to either an Outstanding primary or secondary school. The Bricks&Logic price estimate models allow us to control for location, meaning we really got to see how the Ofsted judgement alone impacted property prices across the capital.
According to the Bricks&Logic Index, being situated on a road where 75% of children attend an Outstanding primary school adds 7.5% to the price of a property while being situated on a road on which 75% of its children attend an Outstanding secondary school adds 8.5%.

Let's put this into perspective by evaluating the impact in a relatively cheap area of London, in this case, Leyton. The average price of a three bedroom 1,200 sqft period house, exactly the sort of home a typical family might be looking at, is approximately £600k. Therefore, all else being equal, simply being close to an Outstanding secondary school could add as much as £50,000 to the price.

Location really does matter

The model behind the Bricks&Logic Index allows us to evaluate and then remove all underlying property characteristics so that we can confidently isolate the impact of a single attribute; in this case the effect of Ofsted school rankings.

As our analysis and that of others has clearly shown, spending more on your home means you are more likely to get your child into an Outstanding school. Whether that means moving to a more expensive part of London, or paying more than the average for a specific area, the price of a home is influenced by the quality (or lack of) of the schools nearby.