Excuse Me, Are You "In The Zone"?

The schools that push up Melbourne's property prices
Author: Jenny Brown
Date: June 27, 2007
Publication: The Age

In the real estate lexicon, and in certain pockets of Melbourne, there is a powerful, almost magical, phrase that can be included in the advertising to increase the price of a residential property.

The golden words are: "In the zone".

If a property happens to be in the zone in Glen Waverley, Mount Waverley, in McKinnon or in Balwyn, it can mean a much higher price than for similar houses in the street, sometimes right next door to each other.

"In the zone" defines residences that put the children of the householders in the Education Department-determined "designated neighbourhood area" of some of the state's top government-run secondary schools.

Victoria's pre-eminent girls' state secondary school, MacRobertson Girls' High School and its sibling, the boys-only Melbourne High School, are selective schools that cream stellar students from throughout the state using a tough entrance exam.

Glen Waverley and McKinnon Secondary Colleges, Mount Waverley, University and Balwyn High are among a handful of non-selective state schools that routinely make the high VCE rankings alongside big-name private schools that charge up to $18,000 a year.

To get into the less costly but still academically renowned state schools, pupils must either pass entry exams or live in the neighbourhood zones. The zones are absolute.

On Glen Waverley College's website, a prominent disclaimer advises that "proof of residence must be demonstrated before enrolment can begin". The permanent residency requirement, which can include tenants as well as home owners, it adds, "will be monitored and enforced". Glen Waverley can accommodate 1850 students.

At Balwyn High and even with its capacity for 1880 pupils, according to assistant principal Bernadette Clayton, "we sometimes make home visits to . . . make sure people are who they say they are".

The top state schools have such good reputations that they knock back hundreds of hopeful students every year.

McKinnon High fields five to 10 calls a day, from as far away as China, from families begging for admittance for their children. For the yearly 220 year 7 places, the school invariably receives double that number of applications.

There is a flow-through effect on the value of "zone" real estate. Harold Laver, of Wentworth Real Estate Bentleigh, believes an address in the McKinnon College zone "can add 15 to 20 per cent to the value of a house compared to a property just out of the zone".

In real terms, he says, "a ground-floor entry, nice, clean vanilla brick in the zone can be worth $750,000 to $800,000. Out of the zone you come back to the basics of about $500,000 to $550,000. So yes, it sure does have an effect."
How much value do parents put on a good education?

Scott Patterson of Jellis Craig, Hawthorn, epicentre of the great private school belt of Melbourne's inner east, says easy access by foot, tram or train to schools such as MLC, Xavier, Carey, Ruyton and Genazzano coupled with proximity to other prominent schools "is the biggest single drawcard behind people wanting to live in the area".

It's a big statement. But he is adamant. "It is a huge benefit. It adds value and people will pay a premium to have their children within walking distance of their schools."

The zone for Glen Waverley Secondary College is, like the other top state schools, particularly sought after by parents, says local agent Kel Northwood, manager of Judd White.

"We've had cases where people have tried to rent houses they don't intend to live in, just to get the address. We always have a high list of rental applicants."
Rentals, like sales, in the zones command premiums.

Mr Northwood says that while it is not an across-the-board situation, "we had a recent auction in the zone that went for nearly $200,000 over the reserve". The corner property had other attractions including, he says, potential for redevelopment.

"But it created a very good situation with more than 200 people attending the auction and about 10 bidders.

"The Asian parents place a lot of emphasis on the significance of education and it has certainly had the impact of driving the prices up."

Mr Northwood hazards that "the zone" effect in Glen Waverley could be 10 to 20 per cent "depending on the property".

"We've certainly had some renovated cream brick veneers on 700 square metre blocks that have gotten $600,000-$700,000. Outside the zone they can be from $500,000 to $600,000."

In Balwyn, says John Bradbury, director of Paul Walker Real Estate, the "in-zone difference could be as high as $100,000".

Ever-renewing Balwyn does not have trivial real estate prices, in or out of the zone.

A house on 700 square metres was recently sold for $1.3 million and it is not unusual for buyers to then bowl over such houses and start again.

What they end up with is a new home that might be worth $2 million or more.

Yet even with such elevated financial horizons buyers still compete to be in the zone of exclusive state schools.

In suburbs such as McKinnon, Glen Waverley and Balwyn, property in "zone" streets, even for those without school-aged children, is a safe bet. Because school zones are so tight, and so strictly enforced, as Mr Northwood says, "the properties within the zones are always more valuable".

The maths does add up, says Harold Laver. "People are hazarding that what they spend on extra residential value, they probably save on a good education."