Expert Advice with Brett Warren 08/06/2019
Have you ever considered that buying in a strong school catchment will increase the value of your home or investment property substantially faster?
I know I have been speaking about it for many years!
But being a numbers person to make my decision I had never see it put so clearly - in black and white, until recently.
You see my favourite saying is that numbers never lie!
So what do the numbers tell us about Brisbane property prices and finding the right property in a top school catchment?
The data below is based on secondary schools in Brisbane;
Source: Matusik Property Insights
It highlights a huge difference over only a 5-year period in a flat Brisbane market.
You would have almost an additional $50,000 on your asset if you had purchased in one of the top 50 school catchments and more than $100,000 if it were a top 10 school catchment.
How has this happened?
In my opinion it is simple – prices rise when there is a lack of Supply and greater Demand as is the case here.
I would suggest that these top schools are based in older, established neighbourhoods where there is a shortage of land and therefor no ability to build new housing.
As there is usually a catchment and boundaries, these also create a level of scarcity.
On the Demand side, when people are looking to settle for the longer term, once they have their employment sorted, they tend to focus next on family and in particular their children’s education.
While some of the private schools are in high demand, it is the public schools that are higher on the list.
It makes sense right, why pay anywhere from $10,000 - $40,000 per annum in school fees when you can get a similar standard of education for next to nothing.
We still get people in our office each year with a couple of kids that would prefer to save school fees of $40,000 - $50,000 and put that toward their mortgage on an appreciating asset.
What would you do with an extra $100,000?
I can answer this question fairly easily as many of our clients have been able to achieve this outcome over the last 5 years.
Put simply – it allows them to grow their asset base faster.
For many it will mean a deposit on another growth asset and perhaps diversification into another big capital city.
And that is the key!
It is why 92% of investors get stuck with only 1 or 2 investment properties, they simply do not grow in value fast enough to expand their portfolio.
For those that do not have the borrowing capacity, they may opt to add value to their asset.
It could mean a simple cosmetic renovation to add additional value and boost cash flow or for our more sophisticated investors, a Development Application on site they have land banked.
How to find these top school catchments?
We would start by assessing the most in demand schools.
Lucky for us, we have been buying the Brisbane market for the last few decades and have the on the ground experience and market depth.
Once you have located the schools, you then need to understand the suburb.
IMPORTANT: Do not assume the suburb you are buying in is automatically in the catchment.
In Brisbane we use the flowing local site to establish catchments and boundaries;
The Bottom Line
Now I have seen it in black and what I can quantify what difference a good school catchment will make to property process moving forward.
Some areas have achieved significantly more growth in a flat Brisbane market.
You need to clearly understand the top performing schools and from there, establish the suburb and ensure they are in the right school catchment.
The alternative is to leave it to the experts.
The team at Metropole have the on the ground experience and market knowledge to ensure you can get the fundamentals right.
Through our network of agents, we also have access to a high portion of off market opportunities.
You know the ones you never hear about, or by the time you do they have already sold!
This is how we assist our clients from being a simple speculator, to a successful property investor and into the top 8% of investors in the country.
Brett Warren is a director of Metropole Properties in Brisbane and uses his 12 plus years property investment experience and economics education to advice clients how to build their portfolios.
He is a regular commentator for Michael Yardney's Property Update.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.