What is the median price and what is the significance to the Melbourne home buyer?
Median: situated in or passing through the middle or a medial number or point in a series.
(TheAustralian Modern Oxford Dictionary)
The median house price in Melbourne is one that this often quoted by the Media, government and real estate industries. Usually this price is the middle of all the prices of houses or units sold in Melbourne in a particular period of time. Often we find that the median prices quoted are using data that is specific to the industry body or agency quoting the figure and often different figures are used to represent the same period of time for the same period of time.
Median data is only of use to governments or industry bodies trumping the growth or decline of general property in an area. It has no specific use to a home buyer. The data can be unreliable or misleading if the sample is small or a certain type of property is overly represented in the sample
Thinking of the home buyer we have been trying to work out the relevance of the median price and as yet we can see no use for these figures even when used at a suburb by suburb level. The data is much too general
What relevance is a price that does not relate to a specific type or style of property? You can not use the median figure to relate to any property purchase, as the sheer number and diversity of properties used in the sample make the data useless.
When assessing the price of a property the processes has to be specific and it is essential a buyer compares like with like. One of the tested methods of checking a likely property sale price is to find a known property, one that you have inspected, that was sold 10 or more years ago and has been sold recently. Then work the growth rates for that period on that specific property. Make sure the property is similar to the one being looked at. Do this with several similar properties and establish a pattern. These figures can be used with relevance to the property being looked at. This data will have some relevance and along with other methods can be used to help assess the likely sale price of a property.
Relevant comparable sales are one of the most important ways of assessing a properties sale price. Compare similar properties in the area with the one being looked at.
Using lots of different assessment methods it is possible to arrive at a very accurate price range for a property being sold and the buyer will be able to establish a bottom line price, one where the property might sell with little competition and a top line price where a the property might sell under intense competition. Doing analysis will help a purchaser not waste time and buy at the right price.
Regards
David McMillan
Director
Domain Property Advocates
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