School Catchment Zones and Demographics Driving Up Property Prices

Australian property market remains one of the most expensive in the world. One contributing factor is the highly sought-after school catchment zones that are pushing up house prices.

Domain’s School Zones Report reveals that more than two-thirds of public school catchments in capital cities recorded house price growth last year, with almost half of all primary and secondary school zones nationally recording higher growth than the suburbs they are based in.

The report reveals that buying a property close to a highly-rated school will significantly increase the value of a home, with families and investors willing to pay more to ensure their children are placed in a reputable institution. The demand is driving up prices, with Artarmon Public School in Sydney’s lower north shore recording the steepest annual house price growth nationally at 43.5 per cent above the 2021 median. In the outer suburbs, such as Riverstone High School in Sydney’s north-west and Drouin Secondary College in Melbourne’s outer south-east, house prices in their catchment zones have also surged.

Furthermore, the research carried out by LongView and PEXA, shows that Australia’s high population growth and sprawling low-density suburbs are driving up house prices over the long-term, rather than the interest rates or the tax system. Demographic factors, such as migration, increased lifespan, and household formation are the key drivers behind Australia’s expensive property market.

In this article, we’ll dive into these factors in more detail to understand why the Australian property market remains unaffordable, even for high-income earners.

TL;DR:

• School catchment zones in Australia are pushing up house prices, with more than two-thirds of public school catchments in capital cities recording house price growth last year, according to Domain’s School Zones Report.
• Buying a property close to a highly-rated school can increase the value of a home, leading to a surge in prices in catchment zones such as Artarmon Public School and Riverstone High School.
• LongView and PEXA’s research finds that high population growth and sprawling low-density suburbs are driving up house prices over the long-term, rather than interest rates or the tax system.
• Demographic factors, such as migration, increased lifespan, and household formation are the key drivers behind Australia’s expensive property market.

Why School Zones Matter for Australian Property Prices

As reported by the Sydney Morning Herald, The Domain School Zones Report released in 2022 found that many school catchments across Australia recorded house price growth above the national average, indicating strong demand for homes in these areas. In fact, some school catchments saw house prices increase by more than 40%, with the catchment for Artarmon Public School in Sydney’s lower north shore experiencing some of the steepest growth nationally.

Buyers are willing to pay a premium for homes located in sought-after school catchments, as they believe it can give their children a better education and potentially increase the value of their property in the long run. As a result, competition for homes in these areas can be intense, with some buyers stretching their budgets or settling for a home that doesn’t meet all their criteria to get into the right school zone.

The report also revealed that many of the top-performing school catchments were located in outer suburbs that offer better affordability. This suggests that changing lifestyle preferences and buyer demand for larger homes with outdoor space during the pandemic have influenced property prices in certain areas.

Why Demographics Matter for Australian Property Prices

While school catchment zones can impact property prices in the short term, research from LongView and PEXA indicates that key demographic factors have helped make Australia one of the priciest property markets in the world.

Australia has a high population growth rate, with more than 400,000 people immigrating to the country each year. This has put pressure on housing supply, particularly in major cities like Sydney and Melbourne where demand is highest.

Additionally, Australia has few large cities compared to other developed countries, which means that housing demand is concentrated in certain areas. This has led to sprawling low-density suburbs, which are more expensive to service and maintain than high-density urban areas.

Finally, Australia’s tax system encourages property investment, with negative gearing and capital gains tax discounts making it more attractive for investors to buy and hold onto properties for the long term. This can limit the supply of homes available for owner-occupiers, which can drive up prices even further.

What Does This Mean for Homebuyers and Investors?

For homebuyers and investors in Australia, these trends suggest that property prices are likely to remain high in the long term, particularly in areas with high demand and limited supply. As SMH reported while interest rates can impact house prices in the short term, demographic factors such as population growth and housing supply will be key drivers of property prices over the long term.

If you’re a homebuyer or investor looking to enter the Australian property market, it’s important to consider both school catchment zones and demographics. School catchment zones can indicate areas of high demand, but it’s important to also consider the quality of the school and the surrounding amenities.

When it comes to demographics, it’s important to consider the population growth rate in the area you’re interested in, as well as the level of housing supply. Areas with high population growth and limited housing supply are likely to experience continued price growth, while areas with low population growth and high housing supply may not see significant price increases in the long term.

It’s also important to consider your own financial situation and long-term goals when deciding whether to enter the property market. While property can be a good investment in the long term, it’s important to ensure that you can afford the mortgage repayments and other associated costs, such as maintenance and property management fees.

In conclusion, school catchment zones and demographics are both important factors to consider when entering the Australian property market. While school catchment zones can indicate areas of high demand, demographics such as population growth and housing supply are likely to be the key drivers of property prices over the long term. It’s important to consider your own financial situation and long-term goals when making a decision to enter the property market, and to seek professional advice if necessary.

Sources: SMH.com.au