What is a "median house price" and why is it useful?
Professionals in the real estate industry often use industry terms like Median House Price and Clearance rate. However, for those of us not in the property business these terms can be a bit confusing. So, we think it’s important to explain the lingo. So we’ve dedicated this blog to clearing up one real estate term in particular…
“Median house price”. It’s probably one of the most common terms used when talking about property and real estate. Undoubtedly, we’ve all heard it. Whether Kochie talked about it on Sunrise or we about read it in the Courier Mail or our local real estate agent sent out a flyer about it.
So what does “median house price” actually mean and why is it important?
The “median house price” is the middle point of all the houses sold over a set period (monthly, quarterly, etc.). For example, if 51 houses sold in March in Brisbane City, the “median house price” would be the price in the middle (e.g. 25 prices below and 25 prices above it). The same principle applies for units/apartments. A lot of reports will simply quote a “median price” figure which includes houses, apartments/units and townhouses (basically all properties with dwellings).
Are memories of your high school maths classes coming back to you? Remember the mean, median and mode?
The “median price” is used as the most common indicator for the property market. This is because it more accurately reflects the sample size being used, the market trends, consumer sentiment and market conditions.
However, it’s not a flawless measure. One of the problems with using the “median price” is that it can tip to the higher or lower end of the scale if there has been a large amount of more expensive or less expensive properties sold in any given period. In these circumstances, you will notice large differences in the “median price” of a certain suburb/area from month to month.
For this reason, it’s always better to view a “median price” over a longer period of time. As the rule goes, it’s generally more beneficial to monitor long-term trends, rather than looking at short-term figures in isolation.
Just remember that a “median price” is only a guide and should not be used in isolation when considering a property purchase or sale. All properties are different so it’s important to talk to your Blocksidge real estate agent. We can put together a Comparative Market Analysis report focusing on your chosen area or specific property. In addition, if you would like a market appraisal please fill in the form under the “Sell” tab in the menu above.
