Australia’s largest body of professional buyer’s agents is warning home buyers not to make their purchasing decisions based on median house price values alone.
Real Estate Buyers Agents Association of Australia (REBAA) president Rich Harvey said many buyers wrongly used median house prices as the benchmark for measuring growth.
He said the tools used to calculate median prices in a particular suburb, was an imprecise science and should not be used as the only measure of valuing property or understanding growth.
Instead he recommended buyers use comparable sales data within close proximity as a more reliable measure of suburb growth.
“Median house prices are regularly used in reference to an increase or decrease in the market price of property in a particular area usually over a monthly or quarterly period,” said Mr Harvey.
“The median is simply the middle figure in a set of data which can fluctuate along with inconsistencies in how that data is collated, often making it unreliable.”
He said often the median house price was affected by the type of housing buyers were buying at the time in a particular area i.e. townhouses, units, luxury homes etc.
According to Mr Harvey buyer demand can vary dramatically from quarter to quarter, altering median house prices values and subsequent growth or lack thereof. Changes in median price become more relevant when tracked over a longer time period of year, rather than months.
REBAA QLD representative Zoran Solano said the irregularity crossed over into capital city median house prices with Brisbane leading the charge.
“Brisbane capital city median house price values are particularly misleading as the Brisbane statistical areas actually includes other cities, unlike in Sydney and Melbourne, some of which are located 25km away from the CBD,” said Mr Solano.
“These includes the city of Logan and the city of Ipswich which have a much lower price point than the inner-city.
“These values effectively pull down Brisbane’s median residential property values to accommodate these multiple cities creating a false average.”
Mr Solano said it was important to note that small geographical suburbs can often only have a corresponding small number of sales which can again, influence the data.
“Buyers need to ensure they understand the local growth drivers of supply and demand and that they are in the right price pocket for that particular location,” he said.
“A buyer’s agent can help analyse the data quickly using the best valuation tools available and guide buyers through the property maze with minimum stress.”