The median price is a guide used extensively by journalists and real estate commentators to describe the ebb and flow of our housing and apartment markets.
Despite its widespread use, the median price is often confused with the ‘average price’. Just to set us straight, the median house price is the middle price of all sales recorded in your suburb, region, city or state in a specified period. This period might cover a month, a quarter (three months), a year or even a decade. In an ascending list of nine house sales, the median price is the fifth property on the list.
Alternatively, the average price is calculated by adding the values of the nine sales together and dividing the total by the number of sales (9). If you’re a first home buyer or upgrader, the Raine & Horne website (rh.com.au), does the work for you of calculating median and average prices for the majority of Australia’s favourite suburban and regional markets.
The median house price is valuable as a guide for home buyers because at a specific time (e.g., over 3, 6 or 12 months), it can help show the favourite price points where the buying and selling action in a local market is occurring. If more people are buying expensive homes in your suburb, for instance, then it’s fair to expect the median will increase. However, if the action is at the entry-level end of the market, then the median price is more likely to be lower. That said, there is a common saying: “Lies, damned lies, and statistics.” As such it’s always worthwhile consulting with your local Raine & Horne agent to find out of there are factors, such a significant sale in a tightly held market that may have skewed the median and average price data.
Days on Market (DOM) is another reference point for gauging the health a property market – and some would say a superior measurement than median prices. The DOM is a measure of how many days it takes to sell a property. Typically, the faster properties sell in your patch, the lower the DOM. A lower DOM is usually a stronger indication that supply is tight, and that it’s a seller’s market. If the days on the market are higher, this often means it is a buyer’s market.