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What is the median price of property?
Median price is the middle price when sales in a stated area and period are ordered from lowest to highest. It describes those sales, rather than valuing every home nearby. The median can change because different types of homes sell. A change does not mean every property's value moved by the same amount.
Updated
How is a sale-price median different from an average?
The median finds the middle of prices listed in order. The average adds the prices and divides by the count. A very expensive sale can raise the average without changing the middle sale. The two figures therefore describe the same sales in different ways. Neither needs to equal the price of the home being considered.
With an odd count, one sale sits in the middle. With an even count, use the average of the two middle prices. The ABS defines median dwelling price using the midpoint of sales in the period. The report still needs to state its area, dates and home type. Those details explain which sales entered the sum.
Why can a suburb median move when similar homes have not changed value?
The types of homes sold can differ between periods. One set may include more large renovated houses. The next may contain more small or older homes. The middle price can then move because the mix changed. That does not require every type of property to change value in the same way.
ABS price methods explain how to allow for a changing sales mix when measuring price changes. A simple median does not make all those adjustments. The mix can matter more when few homes sell. Sale counts and property types add context to the headline percentage. They help show what changed in the group being measured.
What is the difference between median price and a property valuation?
The median describes a group of sales. A valuation checks a specific asset's value at a date for a stated purpose. Land, condition, location and other features can put a house above or below the area's median. The middle sale price is not a price tag for every home in the suburb.
Similar sales make the comparison more relevant to the home being bought. Differences between those homes still need to be understood. Paying less than the suburb median does not automatically mean paying less than market value. The chosen home's features and evidence matter more directly than its distance from the middle of a mixed set.
Illustrative example5 steps
Finding the median when one sale is much more expensive
- Suppose five observed prices are $420,000, $460,000, $500,000, $540,000 and $880,000.
- The third price is in the middle, giving a median of $500,000.
- The sum of those prices is $2,800,000.
- Average price: $2,800,000 divided by 5 = $560,000.
- The median and average differ by $60,000 despite being calculated from exactly the same five sales.
For investors
The transaction mix belongs beside the headline price.
A median can describe the prices of sales in a market. It cannot show the quality or value of the investor's chosen home. Sale counts, home types and dates help explain changes. Similar individual sales and a valuation deal with another question: how the specific property compares with evidence relevant to it.
Common questions
Questions about median price
Keep learning
Property is a complex world.
Median price is one piece of it. Investors judge a market on evidence: supply, demand, rents and growth. Next, read about property valuation, capital growth and days on market.
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