Housebuyers will pay a premium to be near good schools

Parents pay more for homes that are close to good state schools, particularly in cities where the schools are generally poor such as Bristol, research has shown.

The average cost of a home that is close to a good secondary school rises by up to 3% for every 10% improvement in GCSE pass rates, according to a study carried out for Halifax by Cranfield School of Management.

The group looked at the impact of the performance of state secondary schools on house prices in Greater London, Birmingham, Bristol, Leeds, Greater Manchester, Liverpool and Newcastle.

It found that the premium people paid for a property that was close to a good school was highest where the number of good schools was lowest.

In Bristol, which had a lower GCSE pass rate than the other cities studied, a property that was close to a state school with an 80% pass rate would be worth around 12% more than one that was close to a school that had just a 40% pass rate.

The difference was less pronounced in Greater Manchester and Leeds, where every 10% difference to a school's GCSE pass rate added 2% to the vale of homes that were nearby, while in the other cities studied the difference was just 1%.

Martin Ellis, Halifax chief economist, said: "The research is significant in that it confirms the long held suspicion that living next to a good school adds pounds to the value of your home.

"In a time of falling house prices, it is important to be aware of the many factors affecting property values."