New analysis from Cotality has revealed that some families are paying up to $1.3mil more for houses inside sought-after catchments for public schools in Sydney and Melbourne- this however, does not always lead to stronger capital growth.

Cotality has compared property values inside popular public high school catchments with comparable homes in the same suburbs just outside the zone.

 Results confirmed what many buyers had previously suspected – popular school zones attract a hefty housing premium. The catch being that this higher premium is not always matched by longer-term capital growth.

“In some of the most in-demand school zones, families are paying hundreds of thousands – and in one case more than a million dollars – more for a house compared to similar houses outside the boundary,” said Eliza Owen, Head of Research at Cotality.

The largest price gap was seen in Sydney’s leafy North Shore, where homes in the combined catchments of Killara High, Willoughby Girls and Lindfield Learning Village held a median value nearly $1.3 million (or 39.8%) above homes nearby but outside the catchment. Despite this, houses in the catchment recorded lower long-term growth of 126.0% over the past 15 years, compared to 150.3% in neighbouring markets.

In Melbourne, the premium for homes in the catchments of Princes Hill and University High School reached $357,000, though capital growth was again weaker than surrounding suburbs – 82.6% compared to 106.1% over the last 15 years. Of the nine school catchment clusters analysed across Sydney and Melbourne, seven had higher median house values compared to out-of-catchment homes. However, six of these also recorded lower capital growth over the past 15 years.

For many households, paying a housing premium in a high-performing public school zone could represent a long-term saving when compared to private school fees.

The average cost of 13 years of private education in Australia was estimated at $349k in 2022, with significantly higher costs in Sydney and Melbourne, with some Sydney schools charging upwards of $46k annually. 

Unlike school fees, which tend to rise over time, mortgage repayments often decrease in real terms due to inflation. This makes a one-off investment in location potentially more cost-effective than recurring tuition.