Median House Prices?
I thought I would start to use this website to help update peoples understanding of various real estate terms. Todays term is ‘median house price’.
The median house price is the most commonly occurring house sale price in an area over a set period of time (usually 6 or 12 months). The reason the most commonly occurring house sales price is used is so that really high and really low sale prices are not taken into affect. This means that the price is seen as a more accurate reflection of the market and not affected by 1 or 2 unusually high sale prices. For example in Wanneroo the majority of houses are around the $400,000 mark, however Wanneroo also has semi rural properties that sell for well over a million dollars. If these were added to the figures it would make the median price in Wanneroo seem higher than what it really is.
That being said there are a few problems with the median house price method. For starters when they say that the median house price Perth is a certain amount people assume that this means that there property must be worth that amount of money. This is however untrue as many suburbs in Perth have sale prices above and below the median house price. For example in Wanneroo and Banksia Grove the average sale price is well below the Perth median house price.
I feel that the median house price is a great way to measure the prices in a particular suburb but less useful when you start to look at a bigger geographically areas like the entire Perth metropolitan area.
