Why median prices aren’t always reliable
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.
Today we’re going to talk about why median prices aren’t always totally reliable.
I was taught in year 12 maths, that a median is the middle number.
You have 3 numbers.
1, 5 and 10.
The middle number is 5.
The issue median prices have in many property markets is the limited number of sales.
If you have a property market with 100 properties in it.
But only 3 sales during the month.
What do you think will happen to the median price?
It will highly fluctuate depending on the number of sales.
One month may have a sale of $500,000, $800,000 and $1.5m.
The next month may have sales of $800,000, $1.2m and $2m.
Suddenly a massive increase in prices!
Boom times ahead!
But in actuality it doesn’t really mean this.
These median sale figures don’t necessarily take into account how renovated a property is.
If you suddenly have a re-sales from a fancy new development.
What do you think will happen to prices?
Be careful of only looking into median prices.
There’s more than meets the eye with them.”