IMPACT OF SCHOOLS ON PROPERTY VALUES

Abstract

Proximity to schools is increasingly becoming an important factor in the choice of residential properties. The existence of such public amenities influences the behaviour of both demanders and suppliers of residential properties. Such public amenities are capitalised into higher property values. At certain times of the year when the Primary One registration begins, there would be newspaper reports on parents willing to pay a certain premium in order to be located near top primary schools. In view of this trend, this study seeks to determine the initial importance that households placed upon locating close to a top primary school. The role that prestigious schools and institutions play in affecting residential property values will be looked at and the amount of premium that properties near such schools can command will be explored and analysed. The relationship between distance from top primary schools and property values will also be investigated. It was found that most residential owners living in Bishan and the Holland area were either indifferent or did not place any importance on closeness to the school when deciding on their original choice of residential location. However, it was found that parents feel that there is indeed an impact of schools on property values though the effect is a small, rather than a big one. This is because parents feel that factors like location and accessibility to workplace and the Central Business District (CBD) are more important in choosing a home and deciding how much to pay. It was also noted that generally residents living in the Holland area are willing to pay a higher premium of 11% to 15% for a property located near the desired school of their choice. This is as compared to households in Bishan who are only willing to pay a premium of up to 10%. This could be due to their lower income earning capacity as compared to the Holland residents. Households in the Holland area also feel that the increase in property value for a property located near a top primary school is greater in monetary terms. This is because of the already high property value in the Holland area. The survey results also indicate that the nearer the property is to the school, the higher the property value.