Sats "grade inflation" at primary schools has pushed up house prices by as much as £7,000, according to new research.
Researchers from Queen Mary University of London (QMUL) examined the impact of a process known as "borderlining", whereby Sats papers that were up to three marks below the pass mark were rechecked by the original marker and possibly upgraded.
Borderlining was abolished in 2007 by the Department for Education, following evidence that the procedure caused grade inflation in primary schools for thousands of students. In total, an estimated 300,000 pupils were upgraded.
The researchers looked at data from more than 23,000 neighbourhoods in England between 1998 to 2007.
The study, published as a QMUL working paper, found that parents’ willingness to relocate based on the boosted test scores meant that a 3 percentage point increase in the number of students scoring above expectations in key stage 2 English tests increased house prices by 1.5 per cent.
“What our study shows is that even very small levels of grade inflation can make a significant impact on house prices,” said Erich Battistin, professor of economics at QMUL and lead author of the study.
“The reason for this is well documented by previous studies: parents respond to even the smallest marginal differences in the performance of local schools. Over time, this has a significant effect on the composition of the local neighbourhood and makes the area less affordable for poorer families."
The effect on prices is more dramatic in areas with more than one good school.
Co-author Dr Lorenzo Neri said parents were more likely to move to areas with a number of highly rated schools, and in these areas the combined grade inflation of more than one school could increase house prices by 3 per cent, or £7,000 (based on 2015 prices).
“It’s not new to show that prices and demography are influenced by quality, but what we show is that they can be affected significantly even by a false perception of quality.
"It’s not really there, it’s just statistical noise – sometimes generated by the benign intentions of markers to bump up marginal students, not necessarily for accountability purposes,” said Neri.
The researchers also show that the effects go beyond house prices, demonstrating that neighbourhoods in the catchment of schools with more grade inflation experienced a more pronounced increase in the number of grocery shops, restaurants and coffee houses surrounding schools, most likely because local retailers respond to the arrival of richer homeowners.