Real Estate Report Cards: The Price of Living Near Primary Schools

If you have kids or are planning to have them, one thing that you'll likely consider when buying a home is proximity to good schools. Of course, you want them to have the best education, and securing a place near the best schools will make things easier for both you and your family. But beyond personal convenience, is there actually more to owning a property near school zones? Why are they such a hot commodity in the real estate industry? Let's jump right into it.

Obviously, there is a notion that properties near primary schools command a premium and therefore make better investments. So, just how much better are the appreciation on these properties compared to others that don't have the same proximity? Let's take a look at some of the best primary schools in Singapore and see how the HDB and Condo prices fare up.

Source: PropNex Investment Suite

Source: PropNex Investment Suite

As you can see, the data does not necessarily suggest that being near primary schools directly adds value to your home. For HDB flats, the price differences seem to correlate more with the availability of projects in that location. When supply is low, the price naturally goes up, which is just the basic rule of supply and demand. With condos, the chart doesn't really reveal that their value has anything to do with school proximity either.

Still don't believe me? Let's take a look at some examples. These are the graphic sales trends of 3-room HDB flats and 3-bedroom condos located near Tao Nan School, Holy Innocents' Primary School, Nan Hua Primary School and Nanyang Primary School.

Source: PropNex Investment Suite

Condos that are slightly further from Tao Nan School are priced higher than those within 1 km. Meanwhile, HDB performed quite similarly.

Source: PropNex Investment Suite

Condos within 1 km of Holy Innocents' Primary School command a higher price than those within the 1.1 km - 2 km range, but it's the other way around for HDB flats.

Source: PropNex Investment Suite

Properties near Nan Hua Primary School are doing the inverse of those near Holy Innocents' Primary School. Condos within 1 km of Nan Hua are generally priced lower than the ones further away. However, the HDB flats closer to the school are slightly more expensive than their further counterparts.

Source: PropNex Investment Suite

Lastly, properties near Nanyang Primary school behave similarly to those near Nan Hua Primary School. The only exception is that condos have switched trends starting from late last year.

Each and every one of these examples beared very different results. One of the reasons why these data are inconclusive is because many schools are located near one another. So even if a property isn't close to one specific school, it may still be within proximity to another school in the area. This overlap makes it challenging to really know if proximity to any single primary school has any direct impact on property value.

Source: Maply

It's the same way with rental trends. Whether it's HDB or condo, it's hard to determine if proximity to the school is what drives these rates.

Source: PropNex Investment Suite

Source: PropNex Investment Suite

So, if schools don't necessarily add value to your home then why are they in such high demand? Of course, it's more convenient to live near the school where your children go to, but it mainly comes down to the school registration process (rather than investment potential). You see, when a primary school has more applicants than spots, priority is given based on how close you live to the school. So if two kids are competing for one spot, the one living closer to the school will get it over someone living further away.

This system makes properties near popular schools highly sought after, which is why proximity to school may have more impact on property value if it's deemed more prestigious. One study revealed that a well-performing school can boost the resale value of flats within 1 km by 1.8% regardless of location. A top-ranked school can even add up to $135 per square foot to property prices. That means parents living within 1 km of an average school would need to pay about $131,000 more to purchase a home near a top-quartile school. That's almost twice as much as the average salary in the country!

In many cases, parents often compete to live closer to high-ranked schools to secure a spot for their child. Some kiasu parents even buy homes near a school just for registration and then move out afterward. Because of that, the Ministry of Education (MOE) introduced a rule requiring families to stay at the registered address for at least 2.5 years from the time of registration. This helps stabilise the market but it also means parents need to plan ahead.

In the end, the key takeaway is this: proximity to primary school may add to the value of your home if the school in question has a high ranking. Otherwise, it's hard to conclude whether there is a direct impact.

If you have children or are planning to have them, proximity to school is still something you need to consider. Sure, living next to a top school may cost you more, but think of the extra sleep you'll get when your kid doesn't need a 6 AM bus ride. Priceless!

But if you're focusing on investment potential, I suggest looking into other attributes like location or lease tenure. If you want to learn more about these, do join us at our upcoming seminar where you can get expert insights straight from the pros.

Views expressed in this article belong to the writer(s) and do not reflect PropNex's position.