Should we do away with school zones?

For all the complaints about our current government, Julia Gillard has always been a passionate advocate for education reform.  Although the recent Gonski review into school funding has been heavily criticised by the opposition, our current Prime Minister aims to introduce the improvements cited from 2014 as part of an “education crusade”,

Teachers and unions will no doubt have their own views on the changes planned, and there’ll be plenty of forthcoming issues and disputes the Prime Minister has to overcome.  However, out of all the industry bodies looking and hoping for a better qualified nation, the housing industry should be at the forefront.

The UK’s leading property website, Rightmove.co.uk, has produced some interesting research indicating a university education is a “vital” ingredient for current first-home buyers who aspire to buy within the next 12 months.  Seven out of 10 surveyed on the above criteria were educated with either a graduate or post-graduate degree – and despite the fees associated with higher education, the analysts at Rightmove concluded:

“Those school-leavers who are set to embark on a university education this autumn will be encouraged by the fact that further qualifications seem to be an important qualifying factor in getting onto the housing ladder."

The reasons are no doubt numerous and to some extent obvious.  A higher education generally ensures a fatter wage packet, enabling prospective buyers to build their deposits more quickly.  However, money isn’t the only part of the equation.   A quality education builds self-esteem, enhancing an individual’s critical thinking skills – enabling them to filter through a plethora of conflicting advice widely available through digital and print media.   In many cases, it also also equips individuals with the basics of money and business management, which are essential requirements to 21^st-century home ownership.

However, while education plays a valuable role in the fight to stem the reducing number of first-home buyers and issues of affordability – a trend many would like to close their eyes to – it is often not possible to get a child into the best school available for their needs due to the expense of buying in a good school zone.

For example, if you analyse the statistics, being in a school zone for one of the top 20 or so government schools in Melbourne can increase the price of properties in the area at the very least 10% to 15% – and the smaller the zone, the greater the pain.  This is why there’s a strong connection between the top public schools and the price of residential property.  Add onto this property taxes and other costs associated with moving into a school zone initially, and perhaps the only thought a family can comfort themselves with during the early hours of a sleepless night is the nest egg they’ll be left with once the kids leave home and they eventually decide to sell and downsize.

Rental yields for family accommodation are also significantly inflated for properties located in a popular school zone, providing an attractive incentive for investors seeking good growth and yield.   Neither is it unheard of for an old property within the neighbourhood to be rented by a desperate family never intending to move in, but simply using the address to meet the criteria for enrolment into year 7.  I’ve even heard of school principals camping out early mornings and late into the evening, to assess the level of activity in a property suspected of sitting vacant while the family lives elsewhere.

But if you think that’s bad, a story was recently relayed to me regarding one school principal asking to check a family’s electricity bill, with threats to hire a private detective to chase up suspected “zone cheaters”. School zones are without doubt hot property.

However, it’s an unfortunate example of how restrictions on both housing and education through the implication of strict school boundaries can often feed into a culture of separation between various groups of society, thereby producing wide areas of proportional inequality, for which I admit there’s no easy answer.

It’s also worrying that newer suburbs created with the intention of increasing the provision of affordable family-sized accommodation are woefully inadequate in their applications, principally because they often have little more than a small “village-sized” primary school servicing the area.

At worst, it results in a significant disconnect for families spilling into fringe areas and consequently  suffering unintentional discrimination as they are unable to easily access suitable educational facilities.

As a case in point, earlier this year the Victorian government announced the development of six new fringe suburbs – Diggers Rest, Lockerbie, Lockerbie North, Manor Lakes, Merrifield West and Rockbank North – which are planned to accommodate no fewer than 100,000 new residents.  Planning Minister Mathew Guy made a point of stressing these suburbs would be adequately planned and facilitated with appropriate infrastructure, and I don’t doubt the goodness of his intentions.  Currently there are barely a handful of small local primary facilities servicing the area.

However, locating an appropriate pocket zoned specifically to facilitate academic amenities is only one part of the equation – attracting teachers into the area is quite another.  This would seem to especially so following the largest teacher’s strike in the state’s history barely more than a week ago.  In light of this, it would seem the prospect of attracting additional educators to take up the slack is not currently looking encouraging.

Melbourne’s Docklands is another area lacking in educational facilities, with residents complaining they are encouraged to move out of the suburb before their children reach five, and while I welcome the recent announcement of an inner-city site in South Melbourne recently acquired to provide the proposed development at Fishermans Bend with primary school facilities, it’s a mere blip on the horizon in combating a far larger problem at hand.

Earlier this year, the Herald Sun flagged a concern citing “220 government schools” in Victoria alone that turn away local families due to pressures of capacity.  According to reports, 224 primary and secondary schools across Melbourne now have specific zoning and district restrictions.

The unfortunate bubble effect on real estate prices in well-established popular and restrictive school boundaries is an issue of concern especially when school zones are either reduced or extended based on under- or over-capacity.  Should a recently purchased property suddenly be placed outside the zone, it would result in an instant loss of equity to the family’s nest egg. The same would result if a school moved or for some reason closed.  Mowbray College in Melbourne – recently forced into administration – is one such example.  A family home previously marketed as being within walking distance of the college could no longer carry this attraction.

Furthermore, housing in school zones tends to be held for longer periods – periods lasting at least the length of a child’s secondary education and often beyond.  Issues of supply are therefore at the forefront of concern for families hoping to move in and get a bite of the educational cherry. And while school zoning may protect against over-crowding, thereby keeping kids local, it also restricts some families to either the local state facilities – good or bad – unless they are prepared to up sticks and move, or pay for private tuition.

No one would deny that financial literacy and the ability to see through the common myth that residential property doubles every seven to 10 years is becoming all too essential in navigating a successful plan to home ownership.

In an era of stricter lending requirements, sky-high debt-to-household disposable income ratios and what could promise to be an era of long-term economic uncertainty, it is vital we teach young potential home buyers how to minimise risk and save before they spend.

It would also be nice to think the new “Australian dream” would evolve around the vision that no one in 2050 should be hitting their 30s living paycheque to paycheque – with little idea where their super goes and no long-term financial plan.

However, in order to achieve the above, a good education is required –while I’m in no way suggesting that a child not attending a good school will never be a property owner.  I’m making a point for the perception that accessing quality education is causing families substantial pressures of affordability.

It subsequently leaves the question – do we do away with school zones all together?

Increase the number of education facilities in poorer suburbs and in doing so, meet the demands of teachers by pouring greater funding into the education coffers?

Encourage financial literacy, real estate acquisition and critical analysis within every school curriculum?

I have no answer – however there does seem to be a case for highlighting the unfortunate social divide between accessing quality education and the consequential “bubble” prices of accommodation in popular school zones.