When researching property markets many people like to keep track of median property values. While median values are a useful piece of information, they may not give you the complete picture of what is happening in any particular market.
What are median property values?
A median is worked out by using the middle figure of a set of numbers. In the case of property, the middle property price is used of all properties sold over a set period of time (this could be based on weeks, a month or a year depending on the data set).
For example, if there were 11 sold properties, the median value for those properties would be the value of the 6th property – the one that has five properties priced lower and five that are higher.
Median values tend to be cited more frequently than average or mean values (calculated by adding up the values of all properties sold and then dividing by the amount of sales) because they aren’t as affected by unusually high or low value properties, however they still have their drawbacks.
The problem with median values
Median values can provide a useful insight into property trends over any given time but it’s important to be aware of factors that can skew data. For example, if a large number of prestige properties sell in a short period of time it may inflate median values temporarily, even if those properties aren’t a true representation of an area as a whole.
Similarly, if only a few properties are sold in any set period then median values may not paint a very accurate picture of the values of properties in the area.
Median values can, however, be a good indicator in areas where there have been a lot of sales and where there are a lot of similar property types.
Other useful property insights
Buyers and sellers may use median property values to help predict an individual property’s selling price, but there are other ways to gauge prices.
Take a look at sales that are comparable to the property that you’re interested in. These will be properties in the same area that are a similar size and condition.
Keep in mind that no two properties are the same and that a number of things will effect individual home values, such as block size, building size, views, noise levels, aspect, school zones and the list goes on.
The best thing to do is to have a chat with a local property expert than can provide information about prices in the area. They may be able to help explain any discrepancies between selling prices that may not be immediately obvious from looking at listings alone.