Sunday, November 25, 2012

Fixing Housing Policy with Education Policy

Apparently crazy house prices in Auckland (Herald 25th November) may result as much from education policy as from housing policy. 

Teacher unions are afraid of school league tables and performance pay. Meanwhile parents are using cheque books and housing prices to rank them anyway.

The housing market is the league table.

Home buyers and parent home buyers evidently do not believe all schools perform equally well across Auckland;

Home buyers and parent home buyers evidently do not believe learning and teaching involves identical teacher performance.

  • Currently they are prepared to pay any where between $250,000 and $500,000 above market value to get their children into schools they believe are high performers.

The converse is important.

  • Currently they are prepared to pay any where between $250,000 and $500,000 above market value to keep their children away from schools they believe are low performers.

Non parents selling out of the leafy suburbs are able to use their new found capital gains to bid up house prices all over Auckland.

The Ministry helpfully provides property value fences called zones to reinforce the effect. Meanwhile providers of education rock along merrily while house prices soar and reformers puzzle about land availability and construction prices.

Rip those zones out, install some serious performance evaluation measures such as those everyone else faces and the southerly  impact on house prices would likely be serious – right across the board.

Scary thing is – people paying huge educational premia in housing very likely believe they will recover their premia when they sell after the kids are educated – which tells you how big a threat they believe educational reform is.

Being too timid is costing us dearly.

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