Does the proximity of a good school affect or enhance the value of a nearby development that is within the one-kilometre radius?” Our conclusion is yes. In fact, it is one of the major factors that enhance its value. It helps to maintain and sustain the price of a nearby development, especially if it’s within the one-kilometre range. Of course, if you have read some of our previous blog articles, we shared a list of factors that affects the price and appreciation of a property.
In today blog, we’re going to talk about 3 considerable factors on why a good school actually affects the pricing of the nearby developments within the one kilometres radius.
1. Singapore’s Education System
The number one reason is that Singapore is small, plus Singapore focuses a lot on the education system. So for parents, whenever it comes to their kids coming up to the age of six years old in June to July, they’ve got to prep for balloting so that when the child reaches seven years old, they know if they can get into that particular school or not. So usually parents will work and anticipate their kid turning age five to six and then they will plan in advance to move near to the school’s vicinity. So if you want to get into the particular school that is within the one kilometres radius, to gain a higher chance, qualify the child in the various school enrollment phases. You can check on MOE’s website for more details on Primary 1 Registration phases.
It also depends on the competitiveness of the balloting results based on history. So a lot of different forums and websites, they will show the statistics of the past results. In Singapore, because it’s small and parents focus a lot on education, a good school enhances and protects the value of properties around it because of the fact that education is very important in Singapore, which then results in an increase of demand and that’s what we usually see when we are on the ground. Sometimes when buyers call to enquire for a particular property, they will ask and verify if this property is within the one-kilometre radius. So quite a fair bit of parents also move inwards towards the target area of their school that they hope to enter, in anticipation of their child turning towards the Primary 1 age. So the first factor is really because of demand, and demand drives the value of a property.
Why? Because property essentially is a demand and supply. When we talk about the price, sustainability and price appreciation, when there’s more demand, the transaction volumes will increase. When there are transaction movements, the valuation will be strong, and the valuation will increase over time. So demand equals a transaction.
2. Owner Occupied Properties
Usually, if a family has bought a property because of the one kilometres radius, the likelihood of this family using the property for own stay is very high. Primary school education is six years, plus let’s say there is a high school that’s affiliated to primary school right beside, that will mean that there’s a higher chance that this family, might then stay for 10 years because of six years of primary school, four to five years of secondary school.
It’s a good 10 to 11 years and that will mean that the family will tend to stay long so when they stay long and owner-occupation rate is high in that particular project itself, that will mean that there will also be very strong sustainability and holding power so the price tends to hold strong. You won’t see frequent fire sales. Usually, people would just enjoy the development when their kids are growing up.
3. Rental Yield
The top factor is even after the family’s children has grown up of the secondary school or primary school and they decide to shift elsewhere. Sometimes because of the demand in the area due to their school, the owners might tend to hold onto the property and then they rent it out because there are also families who don’t want to buy near to the school, they just want to rent and fulfil the 30 months criteria to be eligible for the priority registration for Primary 1. Owners that bought it previously will tend to want to rent it out as well.
As said during the first factor, because Singapore is small, education is important. Therefore, demands are high around good schools. The second factor is because the ownership rate is high and families around good school tend to stay for long. That’s why the price tends to be more stable. And of course, the third factor is because if the good school remains to be in that same location, the owners tend to want to just hold it and rent it out. So bearing these three factors in mind. Good schools are one of the very important factors when it comes to selecting a property for investment or for own stay.
We’ll see you soon. Cheers.
