Forget the hype about buying a house in a particular school zone just so you can get your children into a high-performing college.
New research has uncovered that Auckland home buyers can save in the region of up to $380,000 – and send their children to exclusive private schools with the money saved – simply by purchasing properties just metres outside the boundaries of sought-after state school zones.
Leading real estate agency Bayleys conducted extensive analysis of property values at multiple suburban locations across Auckland – all zoned within the catchment zones of prominent state-run secondary schools which are among the country’s top performers both academically and for sporting achievements. The reference data stretched back over a two year period.
The school zones analysed included Auckland Boys Grammar, Westlake Boys High School, Rangitoto College, Mt Albert Grammar School and Mcleans College.
The Bayleys research revealed that rather than buying homes ‘in-zone’ at a premium, parents were markedly better off financially buying ‘out-of-zone’ in the same neighbourhood… and then sending their children to elite private schools such as King’s College, Diocesan School for Girls, St Kentigern’s, Kristin and St Cuthbert’s College.
Bayleys Auckland residential manager Rachel Dovey said that even taking into account the cost of paying for private education – which easily totals more than $100,000 per student over the five years of secondary schooling at some of the city’s elite institutions – home buyers were still better off buying out-of-zone.
“For decades, many Aucklanders lived under the misapprehension that they had to live in a particular suburb if they wanted to register their children into selected, high decile, high-performing state schools,” she said.
“Our data shows that to access quality education, that simply isn’t the case. Analysis of the sales data found that, for example, where a school zone boundary sliced through the middle of a suburban street, houses within the sought-after-school zone were priced up to $272,000 more than their comparable counterparts on the other side of the road.
“Over the life of a 20 year mortgage, at a fixed mortgage rate of 6.5 percent, the extra $272,000 it costs to buy a home ‘in-zone’, with interest, equates to an outlay of $486,710. That’s almost half a million dollars.
“Should purchasers take the opportunity of buying a more affordable home and invest the difference in price, they can then also benefit from the accruing interest. For example, if you invested the $272,000 home-purchase saving into
a bank term deposit at a modest four percent interest rate compounding over the five year school period, and you could earn an additional $58,496 before tax.”
Ms Dovey said home buyers considering the best secondary school education choices for their children simply had to look at the opportunity from a different perspective – taking an alternative view to what was a long held housing myth. “Suddenly, the cost of sending your children to private school doesn’t look expensive at all,” Ms Dovey said.
“It’s quite astounding just how much can be saved for the sake of buying a house on one side of the road versus the other, without any need to compromise education quality at all.”
Ms Dovey said the cost-saving formula could well be expanded to other parts of the country – including Hamilton, Christchurch and Dunedin - where the ‘in-zone’ state school fixation was prevalent.
“However, on a national perspective it would be important to remember that the difference in housing costs would be considerably smaller than in Auckland,” she said.
This article is from the March edition of the Bayleys Preview Magazine.