Schools and House Prices

It cannot be denied that there is a seemingly permanent bond between House Prices and Schools. The massive effect that a good school can have on property values in a given area is astonishing and creates an eye watering scenario for all parents who, naturally, want nothing but the very best educational environment and academic accolades for their children.

As most of you know however, locating a property in the right area and at the right price to get a school place can be compared to some form of medieval torture and is usually accompanied by much wailing and gnashing of teeth. The demand for school places is so high on top of the cultural and social benefits of living in an area as highly regarded as Harpenden that usually the only thing that will guarantee you some security for the future of your child's education is the size of your wallet. But let's not blame the rich denizens of the town, after all, if we had the means we would all surely do the same.

To make matters worse, the problem is set to worsen with an article in the Independent published back in September citing figures that show a projected increase of 12% in the number of secondary school pupils by 2023 - this claim is backed by the official government projections release in July 2015 which actually cites a greater 20% growth by 2024. Many local authorities are straining under the demand for school places, with many frantically urging already oversubscribed schools to take on more students.

To help those in the local area, and those moving in, we undertook a little independent research to try and figure out where the best buys are to get the best possible chance of school places. From our research we have tried to identify a handful of well regarded schools in the district so that we can find out how this affected house prices. Note that this does not mean these are the very best, as school rankings are incredibly complicated and we are not experts so please conduct your own independent research if you would like more information. We have left out a number of local schools as well as Private schools for the simplicity of illustrating a point about property prices.

The best regarded nursery schools;

1. Crabtree Infant & Junior School, 2. The Grove Infants School, 3. The Lea Primary School and Nursery

The best regarded primary schools;

1. St Dominic's Catholic Primary, 2. Roundwood Primary, 3. Crabtree Primary

The top three secondary schools;

1. St George's School, 2. Roundwood Park, 3. Sir John Lawes


Now onto the really interesting bit. The maps!

In order, the two maps below show the Zoopla 'heat map' of prices (for the uninitiated, the 'warmer' the colour, i.e. more red, indicates a 'hotter' or higher price) and the second map is the overlay of the locations of the schools with the Zoopla Property Price heatmap on top.

This gives us an interesting indication of prices around the various schools.

The schools are colour coded - the red pins are secondary schools, the yellow pins are the primary schools and the green pins are nursery schools.

The immediate thing that strikes out from this experiment in drawing correlative conclusions is that where one would have thought the highest value area in the town would be is not necessarily the case - it's clear that the big ticket properties in terms of price are almost exclusively located in the Avenues and the area to the north of Rothamsted (average price paid - £1.92m), and areas such as West Common, East Common and the 'ridge' of the hill upon which Harpenden lies (Dalkeith Road, Sauncey Avenue, Clarendon Road) which I'm sure allows residents an arguably deserved self-satisfaction. However, the concentration of outstanding education can be found and easily reached by purchasing property in the areas just off Station Road, namely, Dalkeith Road (£999,999), Langdale Avenue (£675,000) and Carisbrooke Road (£1.01m).

The downhill stroll to the station, the relative calm and safety of the tight-knit neighbourhood and easy access to the southern end of the town certainly makes this a high priority target for buyers looking in the area - and also adds a good selling point for homes;

"We're within striking distance of no less than seven of the towns best schools, darling!" - Now there's something to boast about over morning coffee at the tennis club.

So what about buying to get into a good school without annihilating your life savings? Well, let's be realistic for a start - this is Harpenden, so for most the experience could be eye-watering in terms of price, bearing in mind the National Average House Price as released by the Land Registry is now £196,000 compared to Harpendens £712,831 - over 263.68% higher than most of the UK (sources: Rightmove and Land Registry). Add to that the fierce competition from London money and you might want to be prepared to kiss a few frogs when looking for a deal. The other aspect to consider is that it's not just as simple as buying a house near the school and Bob's your uncle - there is a huge amount of statistical calculation that goes into which school place is offered to whom and when, and you're not guaranteed a place just by postcode, so don't be fooled into buying nearby and thinking you can secure a place as easily as that. There is way more to this, but we're interested in house prices for this article.

The roads where you're most likely to find a good family home and stand a good chance of getting into a local school are likely to be those in the 'cooler' areas on the heatmap, but still within that golden oval on the eastern side of the railway, up Station Road. Often the best deals can be found by understanding that there are roads that are on average, for one reason or another, valued lower than others. Residential streets such as Overstone Road (£547,250) and Cowper Road (£639,000) provide opportunities for you to get your family where it needs to be geographically while avoiding bankruptcy.

Space tends to be limited in the centre of town, so if the station isn't a deal breaker, my hot areas to watch in the town are Southdown, with it's cooler pricing and great access to schools, or North Harpenden and out towards Kinsbourne Green. You might have a greater battle in terms of distance from the schools, but you'll be compromising by having a larger garden and more breathing space.

Of course this isn't an exhaustive list of the top roads, and since your eventual home is such a personal thing it would be impossible and churlish of me to suggest that Dalkeith Road trumps Tuffnells Way or vice versa. Many agents in the town seem to forget one fundamental yet vital aspect of this business, and that is while one deal may certainly look like any other, it is the people involved with their myriad nuances of personal taste that make the entire thing so delightfully interesting.

If you've enjoyed this article, please share it on Twitter and Facebook. If you would like to find out where your next best buy will be, why not give me a call. Alternatively if you're interested in knowing whether your home is going to be a honeypot for the buying bees, you can reach me on 01582 346 111 to discuss your next move.

IMPORTANT NOTES - PLEASE READ:

The data listed and used in researching this article is based purely on government information sourced from the Department for Education school performance reports and data tables. We took into account overall school results to pick the nine schools highlighted above. Your individual biases, experiences and opinions may differ. We have no affiliation, preference or fondness for any particular school in the local area. These schools are not listed in any particular order and this is not a league table or a suggestion of preference, ranking, prowess, ability, cost or any other pitch of favour.

Please also note that in this article we have not examined other local schools such as Batford and Wood End which are also highly regarded educational establishments. It is necessary that you consider all schools in the area before making a choice. You can find a full list on the Department for Education website.

For detailed school information please contact the schools directly or contact your local council.

Rope Ladders, Balconies and The Art Of Balance

Recently released figures from Halifax show that house prices nationally have dropped by an average of 0.9% between August and September 2015. The market is still suffering from a stark imbalance of short supply and upwardly spiralling demand, only restrained by the relative increase in difficulty associated with obtaining finance to purchase property in the form of mortgages.

Mortgage rates remain low, which fuels the demand further.

The typical price of a home however remains 8.6% higher than the same time in 2014. Halifax feel that at this time the market will remain strong with prices continuing to hold steady and rise over the coming months.

So, in light of this news, what could topple the house of cards? Something that everyone seems to continually avoid discussing - so in my typical style, I've decided to roll up my sleeves and plunge both hands into the sticky gooey mess. Lovely!

Interest rates (i.e. the cost of borrowing, or conversely the risk of lending - depending on which end of the seesaw you're sitting on) are, in my opinion, the elephant in the room - nobody seems to want to discuss rising interest rates in case by some force of magic they skip up to the horrifying levels of 12-14% that we saw in the early 1990's. A rise in interest rates would slam the door shut for many who are currently able to afford mortgage finance, assuming they can tick all of the boxes during the inevitable interrogation from the banks.

It's unlikely that the government will overlook areas that would cause uncontrollable rises in interest rates, since the nature of these changes is always symbiotic and higher interest rates usually herald reduced consumer confidence, less disposable income, a focus on saving rather than spending and a consequence of a slowly shrinking economy, effectively undoing any hard work that has gone into achieving growth in recent years.

The MMR (Mortgage Market Review) rules which were introduced last year have previously come under harsh criticism for making borrowing more difficult to achieve for those struggling to purchase their first property and those looking to move up to a larger home, but being too relaxed on lending can have catastrophic results as we all know. Suspending our knowledge for now of the fact that most of the funds we are living on is supported by little more than our belief in it's intrinsic value (i.e. it's Fiat, there's no Gold backing our national currency), to open the sluices and allow a flood of uncontrolled lending would sweep away our foundations and repeat the harsh lessons we learned in 2007. This time around however the public are likely to be much less forgiving of government and banking irresponsibility.

Indeed, last time this happened we bailed out the banks purely because if we hadn't there would have been what can only be described as anarchy - the banks effectively held the government to ransom so they had no choice but to prop the whole thing up to avoid civil unrest and all the fun of the fair that comes with it. The comedy of this is that the public end up getting clobbered no matter what happened, but that's another story - we digress.

The government is therefore currently throttling demand by restricting borrowing - and by throttling I mean controlling the flow of demand in the housing market, rather than suffocating it - the restrained growth we're experiencing very much feels like we're paying out the main sheet oh-so-carefully in a strong gust to prevent us from capsizing the whole yacht.

The other side of the coin is that more housing is required - any fool can see that this is an undeniable truth. This too comes at a price. Diluting the stock too quickly will ruin the gravy - if you build too much, too soon, then demand for 'second hand' property (i.e. houses that we are trying to sell today) will see a fall in demand. However slight this may be, it will have a knock on effect. When nobody wants to buy something you have two choices - stop selling it or make the price more attractive. The net result?  Prices fall, equity is lost and the potential for a 'domino effect' of price drops and loss of confidence spreads like wildfire.

This also takes a tributary feed from the Buy To Let market; squeeze Landlords too much and they'll stop playing, pick up their ball and go home. There is absolutely no good reason for investors to put their money in an asset which doesn't generate significant capital gains or adequate cash flow. Some may criticize this, but in fairness it would be madness to let funds languish in investments that are no longer producing income. That door will shut and many Landlords may sell up, whether through necessity or choice, simultaneously generating a very welcome flood of stock for first time buyers, but utterly hammering the market position of anyone on the next rung up.

So we're playing a very careful balancing act - we can't lend too much, we can't build too much, we can't pinch too much with legislation and all the while prices are rising which is steadily making it harder and harder for people to buy and progress.  Think of an M.C. Escher style scene where a man on a balcony is pulling a rope ladder further out of reach of the person below him - this is rising house prices in action.  Now imagine a further balcony above, with another figure who is also pulling up their rope ladder - that's the widening gap between where he is and where he wants to go.  Rising house prices are relative, and that explains why - the only way around a rope ladder that is out of reach is to compromise and aim for a different balcony.

The problem with this situation is that rising prices are great if you've got a string of balconies and ladders beneath you, but they're awful if you're standing on the ground desperately leaping for the bottom rung and you need to buy some stilts from the bank to do it (who incidentally also own all of the rope ladders and the penthouse balcony, but forgive me for being cynical).

So will everything blow up in our faces? It's unlikely when the government is quite deftly playing puppet master to keep the strings and pulleys in motion while this all plays out, and while the show must go on, the curtain will fall eventually and one of these levees will break - will it be interest rates? Population growth? Economic growth? Too far one way and it all grinds to a halt - everyone will be at stalemate, and too far the other way and we'll face a runaway train with one final destination.

To wipe away the ash from this gloomy prediction - and I will always admit that I could be very wrong, after all I'm just saying what I see, I'm not a soothsayer, clairvoyant or a mystic - the key thing for any of us to do is assess the risk as it presents itself to our personal circumstances. Will buying or moving create a level of risk that you could not handle if things were to change? If the risk is something you can't bear, then stay put and wait unless pushed. But if you're smart and you can see a way through the jungle, then take the leap and swing from vine to vine (or climb from balcony to balcony) - remember that nobody ever got anywhere by standing still.

Top 10 Most Expensive UK Sales in 2014

So everyone by now has seen my local round up of the top ten most expensive roads in Harpenden, but what were the most pricey Sales nationally in 2014? From the Yahoo Finance article;

"Estate agents were counting the profits last year after a record-breaking 13,400 properties sold for more than £1 million. 

A £50 million penthouse topped the list of biggest sales. The luxury apartment on Princes Gate, in London's swanky Knightsbridge was sold in July of last year - netting the Treasury £3.5 million in stamp duty fees in the process.

A strengthening economy saw house prices in London shoot up by 16.3 per cent, which helped boost the number of million pound-plus deals by a fifth. As a result, the capital made up 96 of the top 100 sales."

You can read more here in the Yahoo Finance article.