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How do school zones affect Melbourne property prices?

How do school zones affect Melbourne property prices?
How do school zones affect Melbourne property prices?


One of the most important decisions you may make as a parent is where to send your child to school. You can spend hours researching schools, studying what they offer, their reputation, yearly VCE results and overall school ranking.

Imagine spending all that time researching to find what you believe is the perfect school for your child, only to be informed that they will not be accepted because you do not live in the school’s zoning. If only you had known this when you purchased your family home!

Public secondary schools in Melbourne are separated into zones, such that the entire area is covered. There are few overlapping regions.

The bulk of enrolments will come directly from these zones, making the decision on what area to settle down in a potentially crucial factor for parents.

While private schools are not affected by the same zonal restrictions, many pose a heavy financial burden on the household budget, especially if the choice between public and private has to be made for several children.

If you are a future home buyer, a school zone should be taken into account as this will affect how others view a property and potentially push prices up. This means you could be overpaying for a property because it is within a school zone, even if this is not relevant to you. The school zone effectively comes with the house and you will pay for it regardless as a result of market pricing.

Click pictures and tables to open in new windows:

How do school zones affect Melbourne property prices?

Different school zones may have different impacts depending on their ranking and popularity. This study set out to compare the performance of public schools with house prices in the surrounding region. Our primary aim was to uncover the answer to the question: What is the real, unseen price of education in the housing market and how much do rankings influence this?

School zones are becoming increasingly important in the inner city market. The rise in popularity of public schools is evident by the increase in intake of students each year.

There has been lobbying in some suburbs for more public schools so that the demand for the existing schools is reduced. Population growth in the Port Phillip area has put enrolment strain on the only public school in the area; Albert Park College.

Provision of more public secondary schools in the inner south is necessary especially for South Melbourne and the new Fishermans Bend suburb which are outside the Albert Park zoning. In the inner north, it seems that demand for public schools is so high that one new school does not make a difference. For example, Northcote High School has had to reduce their catchment area recently so that Preston West and parts of Thornbury are no longer included.

They state that the opening of nearby Coburg High School has not affected demand for places and are still having to turn away students.

With a limited number of properties falling within each school zone, demand for these is pushing up property prices and even rents in certain areas.

Popular independent school Haileybury recently purchased a site in the CBD itself with speculation they will open up a new campus to service this growing area of inner Melbourne. They currently have campuses in the south eastern suburbs only. This shows a shift in attitudes of schools whereby it is no longer essential to place a high performing school in the eastern suburbs as was traditionally done. Good schools are now moving to more centralised locations.

This shift in attitude is also seen in parents who are accepting more modern approaches to a school’s design.

Planning is to go ahead for NSW’s first public high rise school in the inner suburb of Parramatta. Whilst high rise schools come with their own problems, it seems the only way forward for the inner city where space is so limited.

Low cost, high performing public schools are a desirable variation to private schools for many, especially as the inner city suburbs have resurfaced to be incredibly popular to live in.

People can now live in their dream inner city suburb whilst sending their child to a good school without having to pay a fortune. Furthermore, the money they save from sending their kids to a public school can go towards servicing a more expensive mortgage, or offering their children an eye opening experience, for example, by taking them to Paris for a family holiday.

Property Values and School Zones

It is well established that there is a correlation between property values and being located in a school catchment area. In our major capital cities, Sydney, Melbourne and Perth, buyers will pay a premium to be located within a public school zone, regardless of its ranking.

A study in New Zealand aimed to actually quantify the impact of geographically defined school zones on house prices. Using hedonic regression, they analysed over 10,000 house sales in a select group of inner Auckland suburbs over 21 years.

What was interesting in this study is the fact that the school zone boundaries changed over the duration of the study.

It was found that when a school increased its boundary to include a new suburb, the house prices in this suburb began to attract a premium compared to relative suburbs and this premium grew to NZ$66,000 over 10 years. When a suburb which had a historic premium attached to its houses relocated out of a school zone, this premium diminished.

VCE Results and House Prices

The Victorian Certificate of Education, better known as the VCE, is the main tool used for ranking schools based on performance.

Students complete the VCE over their final two years of senior high school. In each subject, they are awarded a grade from 0 to 50, based both on their individual performance and the performance of the rest of the state. A score of 30 in an individual subject denotes an average score, i.e. a score in the top 50% of the state.

How do school zones affect Melbourne property prices?

To determine what impact a school's VCE results have on property prices, the sale results of 2,300 houses were analysed using hedonic regression techniques. All two and three bedroom houses were included if they were sold between January 2011 and December 2014, and were located within seven different inner city high school zones, as depicted in the school zone map. This property size and type was picked as it most closely represents a potential buy for an inner city family household.

Table 1 shows the average percentage of VCE scores of 40+ achieved between 2011 and 2014 at the different schools, as well as the average price of two and three bedroom houses in the school’s zone. A study score of 40 or above is indicative of a score in the top 8 percent in the state. The ratio of such exceptional scores compared to the total shows us the proportion of high achievers in each school. Note that Lynall Hall Community School did not publish VCE scores in 2013. Data for this year was therefore left out.

On its own, Table 1 doesn't tell us much, except how affluent an area is. There seems to be no obvious link between the VCE results and average sale prices. However, there are many other factors that determine the price of a house. To single out the effect of public school VCE results on house prices, the following parameters were taken into account in the regression analysis:

  • Bedrooms and Bathrooms: Indicator of the size of the house and number of children. One additional bedroom and bathroom set added on average $350,000 to the price of a house.

  • Land Area: The value of the land the house was located on if it were vacant. Each square metre was worth $1,475.

  • Beach: Proximity of suburb the house was located in to the closest beach, broken up into three bands – adjacent to a beach, one suburb away from the closest beach and more than one suburb away. Each band towards the beach increased the value by $320,000.

  • CBD:  Proximity of the suburb the house was located in to the CBD, in kilometres. For every kilometre away from the city centre, the price of houses in the data set decreased by $80,000.

  • Sale Date: The number of days since the first day in the set (01/01/2011). In other words, the effect of inflation on housing prices. Each day since 2011 added on average $125.80 to the price of each house.

Housing sales that were missing information on any of the above variables were left out of the study.

The analysis uncovered that, on average, a 1% increase in the percentage of scores of 40 and above at a school increases the price of a house in the affected school zone by $19,000, holding all else constant.

This is quite a significant change, between 1.5% and 2.9% of the average price of houses sold over the past four years. To confirm our findings, Secret Agent thought it would be interesting to isolate those houses located nearby the border of two different school zones and analyse their sale results against each other.

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Borderline: Comparing house prices close to two school zones

1) Station Street

Station Street runs in a northerly direction through Carlton North. The school zones of Fitzroy High School and Princes Hill Secondary College meet on Station Street, with the former receiving all even house numbers and the latter every odd house number.

How do school zones affect Melbourne property prices?

The comparison here is almost uncanny. Not only were the same amount of two bedroom houses sold, they were also generally sold in the same proportions each year. The average land area is almost identical.

Table 2 shows that the average sale price is 4.5% higher in the better ranked Princes Hill Secondary College zone. This result is smaller than what our model would predict and is most likely due to the small sample size. 

How do school zones affect Melbourne property prices?

2) Brunswick suburb

The majority of houses in the suburb Brunswick belong to the Brunswick Secondary College zone, but a small part in the south is within the Princes Hill Secondary College district (Figure 3).

How do school zones affect Melbourne property prices?

Even though the houses in the Princes Hill zone are on average smaller (by approximately 50 square metres), they sell for on average 14.5% more. The difference can be partly attributed to being inside the much better performing school’s zone, but is also the CBD.

How do school zones affect Melbourne property prices?

3) University High School

When comparing sales inside University High School’s boundaries to houses sold just outside, results are much less clear cut.

How do school zones affect Melbourne property prices?

While University High is the better performing school, average prices are lower in this zone. The unexpected result can be explained by a huge difference in average land size.

The houses in the University High area have some of the smallest land bases in the entire set of studied houses. As mentioned earlier, each square metre of land is worth about $1,500. If the houses within University High’s zoning had the same land size as those outside the zone, they would be worth roughly $221,400 more, holding all else constant.

In other words, per square metre, these houses are valued much more highly. Again this is most likely due to the closer proximity to the CBD as well as being within the higher ranked school zone. 

How do school zones affect Melbourne property prices?


We aimed to find out how much value home owners and families looking for standalone houses in the inner city see in better schooling according to VCE performance. The answer is clear: property prices are inclusive of a school zone premium and school rankings affect how much the premium paid will be. As the percentage of top achievers in a school increases, the value of houses located within the area rises as well.

On average, the price of a house in a particular school zone increases by $19,000 with each 1% increase in VCE study score above 40.

This shows parents’ willingness to pay for a school zone. whether or not you care about the zoning yourself, you will pay for it to live in the suburbs with high performing public schools. It will be interesting to see how demand for public schools is met in the future as Melbourne's inner population continues to grow rapidly and space becomes even more valuable. 

Jodie Walker is a buyer's advocate and researcher at Secret Agent, a Melbourne based buyer's advocacy.

Richard Rossman contributed to this Secret Agent report.

Paul Osborne is founder of Secret Agent.

You can download the full report on school zones, as wellas other property research, from the Secret Agent website.

Melbourne Schools

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