Double your money zone: Back to school payday for homeowners

For certain Auckland parents, one of the non-negotiables in their house search is grammar zone, preferably double grammar zone.

OneRoof data show that may pay off for home owners in the capital gain they make on properties over a typical high school period, but not always.

Parents who bought in Epsom Girls’ Grammar zone in 2005 and sold in 2019 could have made a whopping $885,000 gain in median price.

But parents in the boys’ grammar zone and, on the North Shore, those in Westlake Boys’ and Girls’ High zones would not have done so well. OneRoof data show that they would have made nearly $300,000 less: median sales prices in those two zones went up only $600,000 and, $610,000.

At $855,000 houses in the Epsom Girls' Grammar zone showed the highest capital gain over 14 years. Photo / file

Parents owning homes in Mt Albert Grammar zone would have gained $560,000 based on changes to median price in the 14 year period.

Figures from OneRoof data partner Valocity show that the biggest leap in median price was for the Epsom Girls' class of 2017: parents who bought in that catchment zone 2013 would have typically seen a $698,000 gain in the five year period their daughter was at school.

The different zone boundaries between the boys’ and girls’ school zones - both cover Newmarket, Remurera, Mount Eden and Parnell, but the boys’ zone spreads to lower cost areas Eden Terrace, Grafton and the eastern edges of the city centre through to Queen Street – mean cheaper buys are possible for ambitious parents.

“The different mix of housing stock in the boys’ zone, with apartments and town houses, means that parents can buy a relatively cheap apartment – Grafton’s median value is around $500,000 - and still send their sons to a blue chip school,” says OneRoof editor Owen Vaughan.

“The schools have had to strictly enforce that families actually stay resident and not rent them out once their son is enrolled. Our data show that capital gain would not be there in the lower prices, but parents are probably more interested in educational gain, not capital gain.”

Back in 2016 when it became apparent that the intensification allowed in Auckland’s 2016 Unitary plan would add some 600 new apartments in their zones, principals of both schools did express concern that they could not keep up with population growth that would bring.

Because Auckland Grammar school zone includes lower priced apartments in Grafton, Eden Terrace and the city, median price increases were not as high as for the girls' school zone. Photo / supplied

Bayleys agent Gary Wallace says whether there really is a grammar zone premium is unclear.

“With our patch, Remuera, Parnell, some of it’s in grammar zone, some of it isn’t. If it isn’t we call it ‘private school zone’ cause a lot of kids are going to private schools.”

There are plenty of great private schools, like Kings College, St Kentigerns and St Cuthberts, he says.

“You do come across the odd buyer that is very focused on buying into grammar zone but with all this talk about zones changing it’s a bit unsettling for a lot of buyers, and to be honest with you the level of high end property we sell in the grammar zone doesn’t come up that often.”

He also says that grammar zone families hang on to their homes in a similar cycle to non-grammar zone families, he says: people find a home which suits them, stay 10 years then downsize when the children go off to university.

Winners and losers over the decade

OneRoof Valocity data show that to be a wise strategy: if buyers had bought for only the typical five years of high school, they’d have done well in the 2015 - 2019 period. While median prices peaked in 2017 and then softened, last year’s pick up would give typical Boys’ Grammar owners a $255,000 capital gain.

Epsom parents would have done better between 2005 and 2009, making $128,900. But, ten years later, with prices in falling in 2018, their five year gain from 2015 would be only $10,000. House prices in the Westlake zone had a similar rise and fall, netting parents in the last five years a mere $9000 gain. An earlier generation of Westlake parents buying and selling between 2005 and 2009 would have netted over ten times that, $98,000.

In his part of town, Wallace points out that there is a changing apartment market now – smarter properties for downsizing former grammar zone parents.

“They may become an apartment buyer, a smaller townhouse buyer, they’ve got the property in Waiheke or up north, and the cycle starts again, a new family moves in.”

In some cases, the zone competition starts at primary school, not secondary says Ray White Remuera agent John Lantz.

Like the coveted grammar zones, there is a coveted ‘private zone’ scenario, where people move to get children into primary schools with great reputations, such as Meadowbank and St Thomas schools in his patch.

People buy out of the grammar zone for schools like this, Lantz says, perhaps intending to move into the grammar zone when the children reach secondary school age only to find they are happy in their home so they stay put and send the kids to a private school instead.

“In my experience, I’ve had just as much rivalry for properties getting into a good primary school than I have seeing parents trying to get their kids into a grammar zone.”

The equity people gain in their house while the children go through primary school might make them reluctant to move, too.

“They realise ‘well, to replace my house that I spent $2m on 12 years ago I have to go and buy a $4m house in Remuera and get less house for the same money.

“So they re-evaulate it and go, ‘look, we’re better off staying here and potentially sending the kids to private school for the next few years.”

Some families will have made some healthy gains doing this.

Lantz has friends who bought in Waiatarua Road, Remuera, in 2005, paying $1.3m for a 1920s house on 3500sq m which he says is now likely worth $5m-plus.

“They haven’t done any significant improvements on the house, it’s just that the land value in that area has gone up $3m in 15 years, so the cost of spending let’s say $500,000 for two boys to go to private school has been far better of a cost-savings exercise and benefit than getting up and moving.”

Moving on

Bayleys’ Gary Wallace says there’s a bit of a catch-22 for people considering where to live in these hot suburbs where there are many good public and private schools on offer.

They might pay a bit more for a grammar zone house and send the children to a public school with lower fees, or they may live out of zone and send children to a private school with hefty fees.

“I think people think ‘well, oh, gee, the cost of private school fees today’. If you’re in grammar zone and you’re not paying the exorbitant school fees, it’s like you’re saving yourself another mortgage payment each month.”

Both Lantz and Wallace say a lot of factors play into which school people send their children to, such as whether there is a family connection to the school.

But Wallace says even if a parent is a grammar old boy, it’s not set in concrete they will buy in the grammar zone.

“If they can’t find it and they fall in love with another house that’s outside grammar zone they may buy that and then look at other ways of sending their child to St Kent’s, or Kings, or something like that.”

And Lantz recalls clients who lived in the grammar zone but sent each of their three boys to different schools.

“One went to Grammar, one went to Kings, one went to St Kents. It was a nightmare for the parents but the boys were just different personalities - one was artsy, one was more academic and sporty - so even though they live in a zone doesn’t mean a school is right for that individual.”

Over in Mt Albert, Gower Buchanan from Ray White says schooling is always the top priority for families in determining where they buy - and the city has many excellent schools to choose from.

“What we do know is if a family has got kids then school zones come right to the top of the list in their decision-making, along with everything else in choosing a home - you know, the street, the layout, the liveability of it, and price, of course.”

Mt Albert Grammar is a big drawcard for people who live in Mt Albert but it’s not the only reason people move to the suburb, and the school has a capped roll so not everyone living in zone might get in.

People in Mt Albert don’t tend to move on just because the schooling is finished, he says.

“We’ve got customers who have lived in their homes for 50 years and, yeah, their kids went to Mt Albert Grammar and their grandkids go to Mt Albert Grammar so that community association runs deep - I think it runs deep right through Auckland.

“People go ‘Auckland’s a big city’ but it’s actually just a collection of really lovely communities. Once you’ve found your niche in Auckland I don’t think there’s a hell of a lot of movement.”

Across the harbour on the North Shore, Richard Milne, of Premium Takapuna, has no doubt people pay a premium to live in zone so they can get their children into schools like Takapuna Grammar, Westlake girls and boys and Rangitoto College in the East Coast Bays.

How much that premium is depends on the type of property and the market at the time it goes for sale, he says.

“If you’re talking Takapuna Grammar School zone as opposed to, say, someone buying in the East Coast Bays it could be 10 to 15 per cent more in value, but it depends on the type of property as well.

“It’s not a simple formula you can throw a number at.”

Milne also says that while people might buy into school zones initially for their children, they end up staying.

“In the area I work, which is East Coast Bays and primarily Milford and Takapuna, those buyers become very accustomed to the coastal lifestyle the area offers and they don’t often want to move out when they’re not required to live in zone [for schools].”

- additional reporting by Catherine Smith