The house price premium attached to homes near to high-quality schools could become more dramatic once a new Ofsted grading system launches in September, according to analysis from a leading estate agency for The i Paper.
The watchdog previously rated schools as outstanding, good, requires improvement or inadequate, but is set to replace these single word judgements with a new report card scheme.
The new system will be more nuanced, and Ofsted’s chief inspector, Martyn Oliver, recently suggested this could play havoc with house prices, as homes near to schools with high grades tend to be more expensive.
And now, analysis from Savills estate agency has suggested that the new system could enhance the premium paid for homes near the best-rated establishments.
How Ofsted grades are linked to house prices
Currently, most leading property portals prominently display Ofsted ratings for nearby schools on house and flat listings.
Data collated by Savills show that the current rating system correlates with prices.
On average, the higher the grade, the higher the house price, as the data below shows.
The figures show that the vicinity of outstanding primary schools to a home generally correlates to a house price premium of 4 per cent above the regional average.
For secondary schools the figure is 5 per cent.
This is why there have been suggestions that a change to the system will impact house prices.
Speaking at an education conference, Martyn Oliver said: “We’ve got two special measures schools right where I live, and the house prices shot up. They were both in special measures, both went outstanding, and the house prices went up £15,000 in a week. It does make a difference.
“We’re about to take that away and change it to something else that for more than three decades people were used to. I mean, here’s the burning question: what’s Rightmove going to do?”
Is it the Ofsted grade doing the heavy lifting?
Although higher house prices appear linked to better Ofsted grades, the Savills analysis suggests other school performance measures actually have a better link to prices than they do.
Other performance measures, such as the proportion of pupils at a schools achieving the expected standard at Key Stage 2 (7-11), or the schools ‘Attainment 8’ score – a performance indicator at the end of Key Stage 4 (14-16) – also correlate heavily with house prices as shown below.
Lucian Cook, director of residential research at Savills said that the relationship between school performance and house prices is there, regardless of whether the school has even had an Ofsted inspection and rating.
“Parents are judging the performance of school and the associated desirability of an area in different ways, often by reputation that is based on a long-term perception of track record, typically passed on by word of mouth,” he says, rather than just based on Ofsted grades.
How could the new Ofsted grades change things?
Cook believes that the proposed scorecard system “could have more of a bearing on where people look to buy a home”.
This is because the scorecards will give a “more nuanced overview of a school’s performance across a wider series of measures” than the current approach.
“It seems unlikely listings websites won’t find a way to display the new results where they paint a picture of an area’s desirability, even if it isn’t via a single word description,” Cook added.
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