The Impact of Outstanding Ofsted Schools on London’s Property Market
Introduction
In a sluggish London property market, houses surrounding the capital’s schools with an Ofsted rating of Good or Outstanding have experienced a higher growth rate compared to their wider boroughs, according to a new research conducted by Benham and Reeves. This article explores the findings of the research, highlighting the disparity in house price growth between postcodes with top-rated schools and the broader districts they are located in. It also delves into the reasons behind this phenomenon and discusses the implications for the London property market.
The London Property Market: A Sluggish Performance
Despite the broader economic outlook, the London property market has remained relatively firm over the past year. However, house prices have cooled down by a marginal -0.6% during this period. This trend suggests a slowdown in property market growth in the city.
The Influence of Outstanding Ofsted Schools
Benham and Reeves’ research reveals that postcodes housing schools with an Outstanding Ofsted rating have witnessed a significant yearly increase of 1.9% in house prices. In contrast, the broader districts in which these schools are located have seen only a 0.2% growth rate. This indicates a much higher growth rate in postcodes associated with Outstanding-rated schools.
Similarly, postcodes associated with schools rated Good have experienced a house price rise of 2.3% over the past year, compared to the average growth rate of 0.6% in their respective wider districts. This indicates a strong positive correlation between the Ofsted rating of schools and house price growth in their associated areas.
The Premium of Outstanding-Rated Schools
Not only have postcodes with Outstanding-rated schools experienced higher house price growth, but they have also shown a premium in home prices compared to the average in their broader districts. This premium stands at 1.9%, indicating that homes in these areas command higher prices due to the presence of top-rated schools.
Although this premium may seem relatively insignificant, it has grown considerably from just 0.1% the previous year. This upward trend suggests an increasing demand for homes located within the catchment areas of Outstanding-rated schools.
A Competitive Housing Market
The demand for education in London has created a highly competitive housing market within certain areas. Parents aspire to secure a spot at a favorably rated school, particularly in light of school closures due to structural issues. This competition has resulted in house price growth within these postcodes that goes against the broader London market, which has been largely static over the last year. As a consequence, houses in these areas come with a premium when compared to the average price in their wider districts.
Table: House Price Performance by Ofsted Rating
| Ofsted Rating | School Zip Code Median Home Price (June 2023) | Annual ZIP Code Change (%) | Median House Price in Wider District (June 2023) | Wider County Annual Change | Annual Exchange Difference (School Zip Code vs. Municipality) |
|---|---|---|---|---|---|
| Outstanding | £599,881 | 1.9% | £588,651 | 0.2% | 1.8% |
| Good | £542,242 | 2.3% | £538,689 | 0.6% | 1.7% |
| Requires Improvement | £560,652 | 2.0% | £554,994 | 0.5% | 1.5% |
Table: House Prices and Premiums by Ofsted Rating
| Ofsted Rating | Median Home Price by School Zip Code (2022) | Median House Price in Wider District (June 2022) | School Zip Code Home Price Premium (June 2022) | Median Home Price by School Zip Code (2023) | Median House Price in Wider District (June 2023) | Schools ZIP Home Price Premium (June 2023) |
|---|---|---|---|---|---|---|
| Outstanding | £588,519 | £587,763 | 0.1% | £599,881 | £588,651 | 1.9% |
| Good | £530,054 | £535,220 | -1.0% | £542,242 | £538,689 | 0.7% |
| Requires Improvement | £549,775 | £552,443 | -0.5% | £560,652 | £554,994 | 1.0% |
The Significance of Outstanding Ofsted Schools
Outstanding-rated schools hold significant influence over the London property market. Their presence contributes to higher house price growth and premiums within their catchment areas. This effect can be attributed to the strong demand for education in the city, prompting parents to prioritize securing a place in top-rated schools for their children.
Diversity of Educational Options
Despite the allure of Outstanding-rated schools, it’s worth noting that there are other factors to consider when choosing a school. Parents may also seek alternative educational options for their children, particularly if those schools offer unique programs or align with specific educational philosophies. This diversification contributes to competition within the housing market around schools beyond their Ofsted rating.
Conclusion
The research by Benham and Reeves highlights the impact of Outstanding and Good Ofsted-rated schools on the London property market. These schools have seen higher house price growth and command a premium in their catchment areas compared to the wider districts. As demand for education remains high in the city, it is expected that the influence of top-rated schools will continue to shape the London property market. Prospective homebuyers should consider the Ofsted ratings of schools in their desired areas when making housing decisions.
Summary
Research conducted by Benham and Reeves reveals that house prices in London postcodes with Outstanding Ofsted-rated schools have risen by 1.9% annually, outperforming the average annual growth rate of 0.2% in their broader districts. Similarly, postcodes with Good-rated schools have experienced a 2.3% rise in house prices compared to the average growth rate of 0.6% in their wider districts. Not only have these postcodes outperformed the broader London market, but they also come with a premium of 1.9% and 0.7% respectively. The demand for education and the aspiration to secure a spot in favorably rated schools contribute to the competitive housing market in these areas. As a result, houses in these postcodes have seen higher price growth compared to the wider London market, showcasing the significant influence of outstanding Ofsted schools on the London property market.
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House prices surrounding the capital’s schools with an Ofsted rating of Good or Outstanding go against a sluggish London property market, with a much higher growth rate compared to its wider boroughs, according to a new research.
Benham and Reeves looked at house prices in London postcodes that are home to schools with Ofsted Good or Outstanding ratings, how they have performed over the past year, and how this performance compares to that of the broader borough in which they are located. find.
The London market has held fairly firm over the past year despite the broader economic outlook, although house prices have cooled by a marginal -0.6% over the past year.
However, research by Benham and Reeves shows that, on average, house prices in postcodes where schools with an Outstanding Ofsted rating are located have risen by 1.9% annually.
By contrast, the average annual rate of home price growth seen in the broader districts in which these schools are located is just 0.2%, which means that ZIP codes with schools rated Outstanding have seen home prices rise by a much larger margin over the past year. only.
At the same time, the postcodes that are home to a school with an Ofsted rating of Good have seen house prices rise by 2.3% over the past year, while the growth rate in their respective wider districts has averaged an increase of only 0.6%.
But it’s not just the performance of house prices that the best Ofsted-rated schools are helping to stimulate the market.
Home prices within ZIP codes that are home to Outstanding-rated schools are at a 1.9% premium compared to the average in their broader districts.
While this may not seem particularly significant, this home price premium has grown considerably since last year, when it was just 0.1%.
Last year, house prices in postcodes where an Ofsted Good school is located were actually 1% below the average for their broader boroughs. However, today they have a marginal premium of 0.7%, a swing of almost 2% in a single year.
Director of benham and reevesMarc von Grundherr comments:
“The demand for education in London is such that housing can be sought within any catchment area, even if those schools don’t have a gold star from Ofsted.
However, most parents are understandably interested in securing a spot at a favorably rated school, even more so after the news this week that so many schools have closed due to structural issues.
This can create an unusually high level of competition within confined areas of the London market.
As a result, house price growth within these postcodes is going against the broader London market, which has been largely static over the last year and these houses are also at a premium compared to the average price in its wider districts.
| The table shows the average house price performance for schools in each Ofsted rating compared to the broader district in which they are located. | ||||||
| category ofsted | School Zip Code Median Home Price (June 2023) | Annual ZIP Code Change (%) | Median house price in the wider district (June 2023) | Wider county annual change | Annual exchange difference (postal code of the school vs. municipality) | |
| Earring | £599,881 | 1.9% | £588,651 | 0.2% | 1.8% | |
| Good | £542,242 | 23% | £538,689 | 0.6% | 1.7% | |
| requires improvement | £560,652 | 2.0% | £554,994 | 0.5% | 1.5% | |
| The table shows the house prices and premiums of schools in each Ofsted rating compared to the broader district in which they are located. | ||||||
| category ofsted | Median Home Price by School Zip Code (2022) | Median house price in the wider district (June 2022) | Schools Zip Code Home Price Premium (June 2022) | Median Home Price by School Zip Code (2023) | Median house price in the wider district (June 2023) | Schools ZIP Home Price Premium (June 2023) |
| Earring | £588,519 | £587,763 | 0.1% | £599,881 | £588,651 | 1.9% |
| Good | £530,054 | £535,220 | -1.0% | £542,242 | £538,689 | 0.7% |
| requires improvement | £549,775 | £552,443 | -0.5% | £560,652 | £554,994 | 1.0% |
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