New estimates of the house price premium for access to good/popular primary schools
Research by Steve Gibbons and Steve Machin confirms that there is a house price premium related to the performance of the nearest primary schools. But some of the findings of the study, published in the Economic Journal, run counter to common perceptions:
· A ten-percentage point improvement in the league-table performance (at age 11, Key Stage 2) can be expected to add at least 3% to the price of a house located immediately next to a school. As might be expected, houses further away are less affected.
· Despite this, primary schools are, in general not desirable local amenities. Only the 1-in-10 top performing schools tend to lift significantly the prices of houses close by.
· Schools that are so popular that they are well over-capacity attract higher house prices, even if the league table performance is not outstanding. And, the premium for league-table performance is larger for popular schools. This could indicate a degree of herd behaviour in school choice. An over-capacity school is a popular school, and so in the eyes of eager parents a good school.
· These findings show that high-performing primary schools are valuable local commodities, and add weight to the argument that residence-based school admissions procedures lead to selection by mortgage and income segregation at primary school.
· At 2004 prices, parents can expect a move from an average dwelling outside a weak school, to one outside a top over-subscribed school, to cost around £61,000 (26% of the mean property price in London and the South East in April-June 2004).
· The same improvement in less popular, under-capacity schools will cost around £12,000 less.
Anyone with school age children worries about getting the best school for their child. For primary schools in England, this generally means choosing a home near a school, because admission to popular schools is soon restricted to families living nearby.
This research looks closely at how parents choices over primary schooling are revealed in house price patterns, using extremely detailed information on the location and timing of house sales in London and the South East over five years.
The study considers some special features of the English school admissions system that add to the complexity of parents decision process. For a start, catchment areas are vaguely defined, and it is usually a question of nearest-in-first-in among families competing for the same school. This generates uncertainty about which residential locations are best.
The problem is compounded by the fact that schools have limited number of pupil places, usually capped by a limit to class sizes and the number of classroom spaces, but parents do not know for certain whether a school will be over or under-subscribed. Parents also have vague and confusing information about school quality, and may look simply at a school’s popularity as an indicator of its effectiveness.
Paying for Primary Schools: Admission Constraints, School Popularity or Congestion by Steve Gibbons and Steve Machin is published in the March 2006 issue of the Economic Journal.
For further information: contact Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com)
Read more about research from Steve Machin via IDEAS and for related papers via the EconPapers service. Intute: Social Sciences also link to more items on the topic of house prices