Homeowners looking to maintain the value of their property should move to an area with good schools, says Belgravia estate agent Best Gapp.
It has long being recognised that living in the catchment area of a school whose students achieves above-average results has helped classify an area as affluent and, as a result, property prices are typically 10% higher than other parts of a town or city.
But a university study of 8000 primary schools in England reveals that local house prices rise by as much as 1.5% in the immediate aftermath of an improved Ofsted score.
And with the average price of a home in London now standing at £550,000, a good nearby school could add £8250 to its value – the same as adding a new kitchen to a property.
The study by Dr Iftikhar Hussain – a lecturer in economics at the University of Sussex, who is a member of an expert panel advising Ofsted on their inspection methodology – goes on to say that for every single-point increase in the rating of a school, property values in already affluent areas increase in value is 1.5%.
Dr Hussain says: “The results of the study make clear that, if they can afford to, people are willing to pay for better quality education for their children, whether that’s directly through private-school fees or indirectly via paying an Ofsted premium when purchasing a property.”
However, short-term changes in exam results and other measures of school quality barely create a ripple in the property market.
The study also warns that there is bad news for homeowners if their local primary drops a notch in the Ofsted rankings.
Not only that, the score achieved by primary schools in poor and deprived neighbourhoods has almost no effect on local property values.
It’s not just the quality of local primary schools that can lift property values, says property management specialist Denhan Guaranteed Rent.
A report released last year revealed that properties within easy reach of a Waitrose supermarket cost 12% more than other homes in the same area.
The study, by Lloyds Bank, came to the conclusion that homes close to a Sainsbury’s carry a 10% price premium, while having a Tesco nearby can life a property’s value by 8%.
On the other hand, a nearby Lidl or Aldi can reduce the value of a house or flat.
Older research confirms what most homeowners already know. Buyers are willing to pay a 10% premium for a property that is close to a tube, railway or tram station.
The research, conducted by Nationwide Building Society in 2014, found the impact is most marked in London, where being located 500m from a station attracts a 10.5% price premium over an otherwise identical property 1500m from a station.
Central London property business Plaza Estates comments: “These three pieces of research confirm that well-located properties carry price premiums. Most home buyers in London look for a property that makes their daily life more convenient and reduces the time it takes to travel to work or perform the weekly supermarket shop.”