Median values, stat way madness lies
Specifically, the median price is the middle value in a set of values. The median value in property refers to the middle value in a range of data derived from all the property sales registered in a single quarter. This includes the lower, middle and top property sectors.
The disparity between the median values released by the researchers can be attributable to the unique current economic environment, which has seen notable movement in property within the bottom and top-end price segments.
According to RP Data, first-home owners account for 27.3 per cent of all owner-occupiers, more than double the number of active first-time buyers five years earlier.
It is estimated that sales volumes in this segment account for 70 per cent of the entire market. This surge in first-home owner activity has resulted in slight growth in property priced at less than $500,000.
Conversely, the prestige market has simultaneously seen significant falls in property sales and values, with transaction volumes dropping 3 per cent to 4.3 per cent.
Because of significant declines in transactions at the higher end and the increased level of activity at the lower end, the median house price for Melbourne property has been skewed.
During a downturn or recession of this magnitude, median comparisons can paint an inaccurate picture of what is really happening and add to the confusion of property investment.
So, what is the best way to determine the value of a property?
When buying or selling it is important to look at various sources to determine market value, such as recent comparable sales, comparable properties unsold, and expert opinion from property valuers.