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Are grammar zone homes more valuable right now?

As the economy contracts, home buyers are weighing up the cost of grammar zone homes versus paying private school fees.

8 July 2020

2/22 Northumberland Avenue, Belmont, Auckland

The Prime Minister, Jacinda Ardern, this week confirmed there would be no further extension to the wage subsidy scheme due to end September 1, though small businesses would be able to access one-off loans until the end of the year.

With this news, Auckland business owners may be going through their personal finances in the coming weeks to see what’s going to have to give. And in some cases, the private school fees may be under discussion.

Over lockdown, North Shore Premium agent, Richard Milne, had some conversations with people about the merit of buying homes in good school zones and not having to worry about private school fees.

He suspects these conversations will come back in the coming weeks.

“I do expect that will follow when the wage subsidy to business owners ends. People in the high income bracket won’t be as vulnerable but some will be impacted – however, there will definitely be some change in the wind,” he says.

Mr Milne believes values will hold very well in blue chip real estate areas of Milford and Takapuna, and the coastal East Coast Bays will also do well as those suburbs are in sought after school zones. “Those suburbs in the Westlake and Takapuna grammar zones tend to always be in good demand,” he adds.

2/22 Northumberland Avenue, Belmont, Auckland

School zones are key on the North Shore, says Harcourts agent Ian Cunliffe, who’s selling a contemporary home close to Takapuna Grammar which is attracting a lot of interest. By sending your child to a local, high decile school, you are saving $40,000 a year per child, he estimates.

“Being in the grammar zone adds to the amount of competition for a home, “ adds Mr Cunliffe.

Double grammar zone in particular demand

Meanwhile, in the inner Auckland double grammar zone for Auckland Grammar and Epsom Girls Grammar, which includes parts of Newmarket, Parnell, Remuera, Epsom and Mt Eden, business is brisk. One senior Barfoot & Thompson agent says she’s having those conversations with parents about the argument for owning in the grammar zone versus taking the private school route at the moment.

“If you have got two or three kids, that’s $300,000 in fees,” she says.

Ray White agent, Frazer Mackenzie-Johnson, has found the double grammar zone tag drawing people in more than ever. People like that the property will hold its value in any market, he says.

311/246 Khyber Pass Road, Newmarket, Auckland

He’s seeing a lot of interest in a spacious double grammar zoned Ockham apartment he’s currently marketing on Khyber Pass Road.

“People are more willing to move quickly on these properties,” he says.

One interested buyer in the three bedroom apartment is a family planning to come into the grammar zone from a lifestyle block in south east Auckland. They were most likely considering private school for their daughter if they stayed at this property, but they’ve decided instead to move into the grammar zone.

“They’re looking at a change in lifestyle completely with their move into central Auckland,” says the agent. The daughter is in intermediate school and will go to Epsom Girls Grammar.

The Ray White agent is keeping a close eye on other competing properties in the same market. He notes that some luxurious apartments up for sale nearby with just the single grammar zoning aren’t attracting as many open home visits, inspections and appointments as his double grammar zoned property.

“Our results have been stellar in comparison,” he says.

“This 17 day campaign has exceeded my expectations and 50% of parties are driven by the double grammar zone tag."

Calculating the value a grammar zone home offers

Research by David Norman, chief economist of Auckland Council’s Chief Planning Office, shows that the difference in value between an identical house in a Decile 1 school zone and Decile 10 school zone is $225,000. Meanwhile an additional $130,000, or 15%, should be added to a home’s value in the double grammar zones.

Mr Norman stresses there are a lot of different things that give an area value beside being in a school grammar zone. Proximity to jobs and the CBD, good transport links, shops and services, house sizes, these all vary from suburb to suburb.

“I do find it interesting that people move into relatively expensive houses in nice areas where they’ve got the decile 10 school already and still send the kids to private school. It seems to be doubling down on the already relatively positive benefits,” he says.

Mr Norman has been heartened by the numbers of New Zealanders coming back to the country, over 20,000 so far, and at least one third of whom will live in Auckland.

“It’s not known yet what resources these “Covid refugees” have, but it could support house prices,” he says.

Primary schools as important to buyers as secondary schools

And it’s not always the proximity of Auckland Grammar and Epsom Girls Grammar which are top of mind with parents, especially those with younger children, says Sherie O’Neill-Johnson, of O’Neill & Associates. She thinks she's getting a lot of interest on her Kohia Terrace, Epsom listing because it’s in the highly sought after Decile-10, Kohia Terrace Primary school zone which has a very small catchment area.

18 Kohia Terrace, Epsom, Auckland

Whoever buys this double grammar zone home, once their children have been through Kohia Terrace Primary, they can walk to Epsom Girls or Auckland Grammar for secondary, says the agent.

“This can be the family home until the kids are in their 20s,” she adds.

Ms O’Neill -Johnson expects returning Kiwis to hone in on the grammar zone areas of Auckland. “People coming back from overseas with kids, it will be the first thing they look at,” she says.