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Unlocking the Link Between School Quality and Real Estate Prices

The Australian real estate market is known for its diverse range of properties, from coastal homes to metropolitan apartments. As prospective home buyers navigate this vast market, one key factor often emerges as a top priority: the quality of schools and education in the area. While many factors can influence a buyer’s decision, the impact of schools on real estate markets should not be underestimated.

In this blog post, we will delve into how the quality of schools affects real estate prices in Australia. By utilizing the ACARA (Australian Curriculum, Assessment and Reporting Authority) dataset and average NAPLAN (National Assessment Program – Literacy and Numeracy) scores, we can better understand the role that schools play in shaping local property values. This information is not only valuable for home buyers but also for real estate professionals and investors looking to make informed decisions in a competitive market.

By the end of this post, you will have a clearer understanding of the importance of considering school quality in your real estate decision-making process, and be better equipped to make informed choices in the ever-evolving Australian property market.

Evaluating School Quality with ACARA and NAPLAN Data

In order to assess the quality of schools and their impact on real estate prices, we must first establish a reliable method of measuring education quality. In Australia, the ACARA (Australian Curriculum, Assessment and Reporting Authority) dataset and average NAPLAN (National Assessment Program – Literacy and Numeracy) scores serve as valuable resources for this purpose.

ACARA is an independent authority responsible for the development of a national curriculum, overseeing national assessments, and reporting on key aspects of schooling in Australia. Their comprehensive dataset provides valuable information on school performance, student demographics, and school resources.

NAPLAN is an annual assessment conducted for students, designed to measure literacy and numeracy skills. The results offer insights into individual student progress, as well as the overall performance of schools and education systems across the country.

While both ACARA and NAPLAN data offer valuable insights into school quality, it is essential to create a composite score that combines these ratings to draw a more holistic picture of education quality in a given area. By integrating various aspects of school performance, such as academic achievement, student demographics, and available resources, a composite score can provide a more comprehensive understanding of the overall educational environment.

You no longer need to scour through countless websites to check the education options in any area. It’s all right there on our new heatmap! And the best part? You can edit and interact with it directly. Have a particular school or in mind? Simply find it on the heatmap to understand how it ranks and compare it with other schools in vicinity.

By considering a range of factors, stakeholders can better appreciate the diverse strengths and challenges faced by schools in different neighbourhoods, ultimately leading to more accurate assessments of the relationship between school quality and real estate prices.

The Correlation between School Quality and Real Estate Prices

Once we have a comprehensive understanding of school quality through the use of composite scores derived from ACARA and NAPLAN data, we can explore the impact this has on real estate prices. Several studies have demonstrated a strong correlation between the two, highlighting the influence that high-quality schools have on local property values.

Research has consistently shown that properties located within the catchment areas of high-performing schools tend to command higher prices compared to those in areas with lower-performing schools. The reason behind this is that many home buyers prioritize quality education for their children and are willing to pay a premium for access to top schools. This increased demand for homes in areas with high-quality schools often leads to higher property values and a more competitive real estate market.

In Australia, several examples demonstrate the link between school quality and real estate prices. For instance, suburbs with top-performing schools in major cities such as Sydney, Melbourne, and Brisbane often experience higher property values than their counterparts with lower-ranked schools. This trend is also evident in regional towns and smaller cities, where high-quality schools can act as a significant draw for families and contribute to increased demand for local properties.

In these areas, it is not uncommon to see homes selling at a premium due to their proximity to sought-after schools. Real estate agents often highlight the school catchment zones and the performance of local schools in their marketing materials, further emphasizing the importance of school quality in the decision-making process for home buyers.

Council AreaAvg. School Ranking 🏆10Y Capital Growth – Houses10Y Capital Growth – Units
North Sydney, NSW8084.20%80.14%
Subiaco, WA8060.60%3.86%
Woollahra, NSW7772.00%62.72%
Willoughby, NSW76136.31%72.30%
Boroondara, VIC7576.86%16.35%
Burnside, SA7587.51%50.85%
Claremont, WA7544.00%11.37%
Ku-Ring-Gai, NSW75122.42%66.23%
Mosman, NSW7581.61%97.91%
Perth, WA7538.17%-18.58%

Table: 10 LGAs with the highest HtAG School Ranking

The table above showcases property price growth for top ranking LGAs in terms of school score Australia-wide. As you can see many highly ranked areas experience significant price growth over the last 10 years, however there is no one “hard and fast” rule that establishes a direct relationship between school quality and price growth. For example Willoughby LGA has the highest growth, but is ranked 4th.

In addition it is also clear that the high rank of schools within LGA is more impactful on house prices and not so much on prices for units. In fact, Perth LGA is in the top 10 of highest ranked schools country-wide, but shows negative capital growth for units on a 10 year time scale.

There is a clear connection between education quality and real estate prices, with high-performing schools serving as catalysts for increased property values in their surrounding suburbs, however it varies between houses and units.

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Challenges and Limitations of Using ACARA & NAPLAN Data

While ACARA and NAPLAN data provide valuable insights into school quality and its potential impact on real estate prices, it is important to acknowledge possible challenges and limitations of relying solely on this information for decision-making.

It’s crucial to recognize that NAPLAN and ACARA scores represent only one aspect of a school’s performance. While literacy and numeracy skills and school resources are important, they do not encompass the full range of educational experiences and opportunities that a school provides. Factors such as extracurricular activities, teacher quality, student support, and school culture also play significant roles in determining the overall quality of a school.

Navigating and deciphering ACARA and NAPLAN data can be a challenging and time-consuming task, especially for home buyers who may not have extensive knowledge of the education system. Furthermore, discrepancies or gaps in the data might result in incomplete or inaccurate evaluations of school quality.

To address these concerns, HtAG Analytics has developed a system that combines inputs from both datasets to create a comprehensive school ranking score.

This score ranks schools based on their educational performance as well as the socio-economic status of students, parents, and staff, providing a more accurate and holistic representation of school quality for informed decision-making.

School quality, particularly of local government schools, can considerably influence real estate prices. Homebuyers with families often prioritize access to admirable educational institutions, and high-ranking schools can make a neighbourhood significantly more appealing. In essence, higher demand equates to higher property prices.

HtAG takes particular consideration to the prominence of public schools in an area. Recognizing that there’s a marked correlation between high-ranking government schools and neighbourhood affluence, as well as real estate price appreciation, the platform optimizes the weighting towards these institutions. This methodical approach allows for more precise and reliable property market projections and insights.

Balancing School Quality with Other Factors in Real Estate Decision-Making

While school quality is undeniably an important factor in real estate decision-making, it is crucial to consider it in conjunction with other aspects of the local property market. Evaluating school rankings should not be done in isolation, as supply and demand dynamics in the local real estate market also play a significant role in determining property values and investment potential.

When assessing the impact of school quality on real estate prices, it’s essential to take into account neighbourhood demographics and other relevant factors, such as local amenities, transportation options, and employment opportunities. These elements can also have a considerable influence on property values and the overall attractiveness of an area for potential buyers.

Image: House Price Growth vs School Rank

As we can see there is a positive linear relationship between school rank and long-term house price growth. However it is not significant enough to be a sole decision making factor when deciding on areas to invest in. In addition all areas with the school rank above 57 have experienced positive house price growth in the past 10 years.

Understanding the current state of supply and demand in the local real estate market is crucial for making informed decisions. High-quality schools may drive demand for properties in certain areas, but if there is a limited supply of homes available, this could lead to rapid price increases and a highly competitive market.

On the other hand, areas with ample housing supply and lower demand may experience more modest price growth, even in the presence of top-performing schools. Therefore, it is essential to balance school quality with an understanding of the local market conditions to make well-informed decisions.

Taking a Holistic Approach to Invesment Decision-making

Ultimately, the key to successful real estate decision-making lies in adopting a holistic approach that considers multiple factors, including school quality, neighborhood characteristics, and market dynamics. By evaluating these aspects collectively, home buyers, investors, and real estate professionals can gain a comprehensive understanding of the local property market and make more strategic decisions.

In conclusion, while school rankings and quality play a significant role in influencing real estate prices, it is vital to consider them alongside other factors that contribute to the overall value and desirability of a property. By adopting a balanced and informed approach, stakeholders can make the best possible choices in the ever-evolving Australian property market.

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By utilizing the ACARA dataset and NAPLAN scores to create composite scores, we can gain a more comprehensive understanding of a school’s overall performance and its influence on local property values. However, it’s crucial to remember that school rankings should not be used in isolation when making real estate decisions.

To ensure a holistic view of the local property market outlook, it’s essential to consider the school quality alongside a wide range of other factors that can influence property values. The Relative Composite Score is a metric that addresses this need, combining school rankings with over 80 other metrics to provide a comprehensive assessment of the local real estate market.

Adopting a well-rounded approach that takes into account school quality, suburb demographics, and market dynamics is vital for making informed decisions in the Australian property market. By leveraging the HtAG School Rank along with the Relative Composite Score, home buyers, investors, and real estate professionals can navigate the complexities of the market and make strategic choices that align with their goals and priorities.

HtAG Average School Rank (per LGA or Suburb) is available in downloadable Market Insights reports. Furthermore NAPLAN/ACARA combined ranking data is also available for over 8,000 schools nation-wide.

1 thought on “Unlocking the Link Between School Quality and Real Estate Prices”

  1. Check out this short video to learn how to change the heatmap to show the data in the way you like best. After you’ve done that, you can save it as a picture and share it with others.

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