Does the school input quality matter to nearby property prices in Taipei metropolis?

Purpose - This paper aims to analyse the spatial effect of school input – “student–teacher ratio” – on property prices in Taipei Metropolis, Taiwan. The falling fertility rate inevitably changes educational system since more less-experienced part-time teachers are hired for the sake of schools’ budget. Hence, in addition to full-time teachers, part-time teachers are included in measuring the student–teacher ratio to see if an increase in part-time teachers, indicating the possible plunge of school quality, may decrease the value of nearby properties. Design/methodology/approach - Three types of spatial regressions (including spatial lag, spatial error and SARAR models), which incorporate different kinds of spatial dependencies into hedonic models, are applied to reveal the relationship between two measures of student–teacher ratios and property values. Findings - Conventional variables, including housing attributes, demographics and local facilities, demonstrated their consistent and expected influence on property prices. More importantly, the significant “student–teacher ratio 2” (both full-time and part-time teachers) indicated that low-paid, less-experienced and overworked part-time teachers can hardly deliver quality instruction, which inevitably causes harm to school credit and potential buyers’ confidence in valuing neighbouring properties. Practical implications - Facing the decrease in children and the shrinking budget, the solution to maintain teacher’s quality is to remove the unnecessary administrative chores from full-time teachers and let them do their jobs rather than hiring part-time teachers. Good school input quality should add value to nearby properties, which in return appeals more students to enrol in this school and further elevate schools’ financial burden. Originality/value - This paper is one of the few studies that consider part-time teachers in capitalising school-input quality into property prices. The increase in part-time teachers, which may lead to an illusion that each student could have higher degree of individual attention from teachers, actually lowers the education quality distributed to all the students. It provides a different perspective in defining the importance of teaching quality to property values in Chinese culture.