No, these numbers don’t work

Scottish parents could save thousands of pounds by educating their children privately instead of paying over the odds for a home in the catchment areas of the best state schools, according to a study published today.

Reform Scotland compared the average house price for a particular place with the cost of properties in the catchment areas of the best-run local authority schools.

The think tank found that the difference was often more expensive than the cost of private fees for two children during the six years of secondary school.

OK.

Using figures obtained by the property website Zoopla, the think tank found the average house price paid in Edinburgh over the past three years was £225,931.

However, this figure increased to £327,313 for the catchment area of Boroughmuir High School, the city’s best-performing state establishment, a difference of £101,382.

A mortgage for the latter sum using a competitive interest rate of 1.99 per cent would cost parents £127,000 to repay over 25 years, the report said.

In comparison, it said fees at George Heriot’s School, George Watson’s College and Erskine Stewart’s Melville Schools – three of the capital’s most eminent independent establishments – are around £10,000 per year.

The cost of educating two children for six years of secondary school would total around £123,000, assuming fees increase at about one per cent annually, it said.

“Therefore, it is cheaper to send two children to private school than buy a house in the catchment area of the best performing school in the city,” it concluded.

Ah, no. For you reclaim the sum you’ve spent on the mortgage (minus the interest perhaps) when you sell the house to the next family wanting to send their kids to the good school. The cost of the house is the carrying cost, not the total cost.

12 comments on “No, these numbers don’t work

  1. I wonder how they calculate other costs. Some things do not, after all, have an immediate price tag on them. Parents pay a lot of money to get their children into the right schools for a variety of reasons. One of them is so that they do not have class mates like these:

    http://www.telegraph.co.uk/news/uknews/4291462/Gang-jailed-for-caustic-soda-rape-of-girl-with-learning-difficulties.html

    Do they suggest a plausible cost for that sort of assault? Did they even ask themselves what they would pay to keep their children away from such people?

    The price of housing is, no doubt, one of the many reasons the British Middle Class supports our vibrant multicultural society and the immigration of people like these – their children don’t have to go to school with them. The poor will just have to take their chances so that the world knows we feel really bad about that Empire-thing.

  2. If
    Good schools stay good
    Prejudice against independents remains
    Bad schools don’t improve much
    then
    Buying near a good state school is the way to bet

  3. Actually I think the only reason the numbers don’t add up is because they’ve compared 25 years’ worth of marginal interest costs with 12 years of schooling costs.
    It’s also not clear whether they have done the correct regression and allowed for the fact that better schools are usually in, well, better areas.
    It may well make real sense for parents to send their child to a fee-paying independent school, but it cannot be ‘cheaper’ in the simple numerical sense.

  4. It may well make real sense for parents to send their child to a fee-paying independent school, but it cannot be ‘cheaper’ in the simple numerical sense.

    You are almost certainly correct but the Edinburgh housing market is also very, very skewed to certain areas. Admittedly, buying close to Heriots, Watsons or Stewarts Melville isn’t going to be cheap either. Particularly the latter. Edinburgh Academy, on the other hand …

  5. A friend of a friend was very loudly against private schooling and then spent a pretty sum to be handy for Linlithgow High School. No doubt he blamed his wife.

  6. I live close to the edge of the Boroughmuir catchment area (west south city centre), but just outside it in the catchment area (central south city centre) of the second best state school in Edinburgh, James Gillespies, where my daughter goes. The James Gillespies catchment area housing is probably on average more expensive than the Boroughmuir area.

    Boroughmuir basically skillfully avoids any crap areas in its catchment, James Gillespies has two or three slightly crap areas which I imagine pulls its score down slightly from Boroughmuir.

  7. Knowing Edinburgh the posh areas are very posh and some of the outskirts rather trainspottingish. So the posh bits are well worth paying extra for in even if you aren’t buying schooling.

  8. Ironman

    Assuming this research is done the same way as past versions have been, the standard method is to take houses that are geographically adjacent to each other (or close enough), adjust for other characteristics (number of rooms, etc) and calculate the premium. This type of research tends to control for quality and location quite carefully.

  9. ken

    The sneaky “similar, neighbouring properties straddling a boundary” idea is very common in American papers using hedonic price modelling. Wonder if their equivalent of catchment areas is more clearcut than ours – depending on the area, British kids can travel quite some way to go to religious or grammar schools and even further for special education schools.

    Traditionally most British papers on the subject I’ve seen have just thrown a bucketload of variables (some structural characteristics of the property, others environmental variables) into the regression in the hope of controlling for anything important. I read a British paper recently that did the boundary trick and called it the “US method”.

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