How much more do you pay to live near a good school?

8 Jul 2016

If you're looking for Melbourne real estate to settle down in the for the long term, you're going to have to think about schools. With more than 3.7 million students enrolled nationwide at the Australian Bureau of Statistics' last count, many people looking at Melbourne property will want somewhere that is in the right spot for a good education.

But where are these zones, and how much of a premium are people willing to fork out for a home that comes with a good school for their kids?

Are the best schools worth more in terms of real estate?Are the best schools worth more in terms of real estate?

How do you find the good schools?

More often than not, a school's reputation will precede it. Spots like Penleigh and Essendon Grammar (PEGS) or Mac.Robertson Girls High School consistently feature at the top of schools ranking lists, and are in central or northern locations that people are always looking to buy into. Even if schools like PEGS are not zoned, people tend to move closer for accessibility. 

Word of mouth, online aggregators and sites like MySchool are all indicators that you can use to find an educational facility that suits exactly what you want for your children. Picking a place to live in the inner north will usually place you in the right zone for a lot of the top tier schools.

How much do people pay for these areas?

The Real Estate Institute of Victoria (REIV) did research on how much people pay for real estate in certain school zones over the year leading up to March 31st. It found that for one part of Melbourne that were zoned for desirable schools, houses had a median price of $1.395 million, while neighbouring spots saw this drop to $799,000.

That is nearly $600,000 more that people are paying to live in a Melbourne suburb zoned for their preferred school. Geoff White, CEO of the REIV noted that people were often shying away from enrolling their children in private schools, putting this money instead towards buying real estate near the best public schools in the city.

"These areas also experience a high number of sales indicating the level of buyer demand within these zones," he added.

The cost of buying in a specific school's zone can be significant.The cost of buying in a specific school's zone can be significant.

Not every school zone costs more than half a million dollars more than neighbouring suburbs – this is the most extreme example that the REIV gave. However, the point is clear – getting a property near the best education is going to cost you a little bit extra. 

What about university? 

It isn't just people with kids looking to buy new real estate that will be impacted by proximity to educational facilities, either. Students in search of apartments for rent around Melbourne will also want to be close to their campus. 

Between RMIT, University of Melbourne, Swinburne, La Trobe and Monash, there is a wealth of higher education in and around the city. The University of Melbourne's own statistics show more than 45,000 enrolments in 2012 alone, showing just how many people there are likely to be living nearby.

According to data from Residex, the median rent in Parkville (where the University's main campus is situated) is $900 for house or $440 for a unit or apartment. Meanwhile, only a few suburbs north in Brunswick, these respective figures drop to $630 and $400.

Costs will be higher if you want to live close to the top schools and universities.

Even when it comes to rental property in Melbourne, costs will be higher if you want to live close to the top schools and universities. Whether you bite the bullet on this is going to depend entirely on your own desires. Do you have to live in a particular school zone, or is it better for you to live further away, commute and pay less for a home?

Essentially, how much are you willing to pay for a particular type of education?