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How much extra do you need to pay to live near the best state schools? 6 Minute Read

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In our experience, most people who have young children or who are thinking about starting a family, have given serious consideration to whereabouts in London they want to raise their kids.

Almost overnight being close to good bars and restaurants suddenly becomes a lot less important than your proximity to nurseries, primary and secondary schools. But it’s not just being near one, or indeed all, of these services that matter. An even bigger piece of the puzzle is how well-performing those services are relative to national averages. 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.

A couple of key definitions

The focus of this blog is on state primary and secondary schools as we have used the huge amount of useful data published by Ofsted, the Office for Standards in Education, Children’s Services and Skills , to inform our analysis. 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 inadequate1.

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 they define them. In days gone by, the parameters of schools’ catchment areas tended to be quite static, meaning if you lived within it, you could be fairly certain that your child(ren) would secure a place. Unfortunately that is no longer the case. Parents now have to tackle geographical uncertainty in tandem with any other admissions criteria schools decide 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. Given that hard and fast rules don’t exist, we have relied on the most recent catchment area data published by the Greater London Authority in 2016 to inform our analysis 2.

Is it really all up, up, up?

Articles and analysis pieces arguing that living near an outstanding school puts an automatic price premium on your property are in no short supply. Even where regional differences are highlighted, the same top-level conclusion is drawn, namely that a positive correlation does indeed exist. For instance, one source stated that, ‘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.’3 And we would be inclined to largely agree with this high-level analysis. But, (there’s always a but), an uncritical acceptance of the London specific figures cited above would probably lead you to think that regardless of what area of London you lived in, your property would be almost £40,000 more expensive than a property that didn’t fall into a good or outstanding catchment area. Unfortunately, when we started analysing specific areas, this didn’t prove to be the case.

Early years education at the forefront of parents’ minds

Before we go into any more detail, it is worth highlighting that our analysis showed the link between house prices and proximity to an outstanding shool is much more pronounced at primary level than at secondary. In fact, as the link at secondary level was often marginal, the rest of this blog will focus solely on primary schools.

Locating London’s highest rated primary schools

We started our deep dive into the data by mapping where the highest concentration of outstanding, good and requires improvement schools were. To do this, we placed each of London’s postcode districts into one of five groups depending on how the Bricks&Logic Property Index calculated its average property value.

Most Recent Ofsted JudgementBricks&Logic Price Band
20% Cheapest40% - 60%40% - 60%60 - 80%20% Most Expensive
Requires Improvement10%7%3%6%7%

Figure 1.1 shows the percentage of state primary schools achieving each Ofsted judgment according to what band of London’s average property value they were placed in. For instance, the top 20% most expensive areas of London (such as Marleybone, Primrose Hill, Regent’s Park, Mayfair, Soho and South Kensington) have just over double the percentage of outstanding schools than the 20% cheapest areas of London4. This data leads to a very simple conclusion - the more expensive the area you live in, the higher the chances are that you will be able to secure a place for your child to attend an outstanding primary school. This finding is supported by the vast majority of analysis already out in the public domain.

Removing location from the equation

Despite our strong adversion to generating London wide averages, we decided to see what numbers we came up with. Our model enabled us to control for location, meaning we really got to see how much the school judgement alone impacted property values across the capital. According to the Bricks&Logic Property Index, being in the catchment area of an outstanding primary school adds 4% to the cost of your property relative to being in the catchment area of a requires improvement school. If you are close to a good school, it adds 2% (again, relative to being in the catchment area of a requires improvement school). These figures are definitely interesting (and a 4% price uplift certainly isn’t to be sniffed at), but we couldn’t help by feel this broad-brush London wide average was likely obscuring some even more interesting nuances.

Given the marked difference in the number of outstanding schools in the most and least expensive areas of London, we decided to investigate how that factor alone impacted prices. If you happen to live in an area where the underlying land value is (by London’s standards) fairly cheap, does school judgement have a significant impact on dictating the price of your property? The short answer is yes.

A story of two halves

If you live in one of the cheapest areas of London, being in the catchment area of an outstanding school, compared to being in one that requires improvement, adds a whopping 9% to your property price. Being within a good catchment area adds 5%. To put this into a real-world example, if you’re looking for a 3 bedroom 1200sqft family home for under £550,000 (a set of criteria that would likely have you searching in the capital’s cheaper postcode districts), you can expect to pay an extra £49,500 to be in the catchment area of an outstanding rated primary school compared to what you would pay if you settled in the catchment area of a school that requires improvement.

However, there was no real detectable price difference if you live in one of the capital’s most expensive areas. It seems that areas such as South Kensington, Chelsea and Mayfair would continue to have some of the most expensive real estate in London even if all of the outstanding state schools shut up shop tomorrow.

Dispelling the London wide universal ‘truth’

The model behind the Bricks&Logic Property Index strips out all of the underlying property characteristics so that we can confidently isolate the impact Ofsted school judgment has on the price. As our analysis has shown, the impact of being located in the catchment of an outstanding primary school is much more marked in the cheaper areas of town. In fact, the 4% London wide uplift we noted is generated from the averaging out the 9% uplift experienced in cheaper areas with the 0% uplift experienced in expensive areas. And all this is made even more intelligible by the simple fact that there are fewer places at outstanding primary schools available in those cheaper areas. So whilst we can’t be the bearer of good news for absolutely everyone who happens to be lucky enough to live in the catchment area of an outstanding primary school, there are some people who can either capitalise on a 9% increase in their property value or sit back and relax in the knowledge that if and when kids come along, they won’t have to worry about the whole catchment area song and dance.