There are many articles and commentaries in the media describing Australia’s primary bubble, the housing market, but there is not much talk of Australia’s secondary bubble – private education costs.
According to the Australian Bureau of Statistics (ABS), approximately 34% of secondary students go to a private school, this is higher than a number of similar OECD nations including Canada and the UK. Raising children is costly, a private secondary education adds to this cost. Here is a snippet from an article from ‘The Australian’ showing educational costs.
Yearly pay wage growth in Australia is increasing only 1.9% (ABS) and annual private educational costs are increasing at 4% (The Australian) and this trend will cause additional household financial stress.
It has been 26 years since Australia has had a recession, how long can this last?
Scenario:
- After years of economic growth Australia finally has a recession, deepened by a possible economic downturn in China
- Being pressed, a number of parents can no longer afford to send their children to private secondary schools and student enrolments goes down
- As student enrolment in private secondary schools goes down, private education costs per student goes up and private school cost contingencies start to deteriorate; this in turn causes further fee increases and hardships for private secondary schools and families
- Public schools find it difficult to handle the increased enrolments causing further stress, placements are not immediate
- House prices valuations near public schools increases, making it difficult to move and buy closer to public schools with better reputations, selling is already more difficult because of the recession
- The pattern continues for the duration of the recession, some public schools in turn attract more students who may continue to stay on, increasing the competitiveness of some public schools
- The private secondary education bubble deflates depending on the depth and duration of the recession
References:
- Australian Bureau of Statistics (ABS) – public school enrolment is on the rise http://www.abs.gov.au
- The Australian http://www.theaustralian.com.au/national-affairs/education/private-school-fees-spiral-crushing-parents-hopes/news-story/b0b26b43d3520861ff8e0b166b174a61