A Tax Depreciation blog by Paul Bennion.
Schools are an important driver in property values that should be seriously considered by investors when buying building a property portfolio
This is because our company has undertaken thousands of tax depreciation reports for investor clients over the years who have bought into suburbs because their new investment properties were located close to schools.
These individual investors who have used our services, have not just bought one property close to schools but several over an extended time frame as it has proven to be a wise investment strategy.
For investors, buying close to a school can have a positive impact both on rental returns and future capital growth.
For renters with families, schools are a key issue as they want to have easy access to their important community asset.
At the same time, schools which have a high educational reputation underpin local property values as families want to give their client access to the best education possible.
The scale and important of the schooling sector in Australia has been highlighted by recent ABS figures on the sector.
Between 2014 and 2015, the number of students enrolled in schools in Australia grew by 56,872 (1.5%) to a total of 3,750,973. The increase was greater in government schools (1.6%) than non-government schools (1.4%).
Within the non-government sector, the number of students attending Independent schools increased by 2.0%, while those attending Catholic schools increased by 1.0%.
Across the states and territories, the largest proportional increases in student numbers occurred in Western Australia (3.1%), followed by the ACT (2.3%) and Victoria (1.9%). Student numbers fell slightly in the Northern Territory (0.5%) and Tasmania (0.4%).
At the affiliation level, student numbers at Independent schools rose by 5.4% in the Northern Territory and by 2.4% and 2.3% respectively in Western Australia and Victoria. Students attending Catholic schools rose by 3.5% in Western Australia and by 1.8% in Queensland.
The ABS figures also revealed that government schools continued to be the major provider of school education in Australia in 2015, with 2,445,130 students (65.2% of all students) attending, while 1,305,843, students (34.8% of all students) attended non-government schools.
Schools are just one piece in the infrastructure jigsaw that investors should consider then buying an investment property.
Other key infrastructure that may have a positive impact on future rental and capital growth rates include new shopping and medical facilities as well as public transport investment like light rail.
Focusing on fundamental drivers of property values such as new infrastructure is even more critical in the Australia property market today with property prices now under a downward pressure in many capital cities.
As market conditions become more challenging, properties that are in most demand due to their location close to infrastructure will outperform the overall market both in terms of rental and capital growth.