How to Read Median Prices for the Suburb you are Buying into
Median house prices simply mean the middle price home owners are getting, on average, for their homes during a prescribed period. This can mean a different median price depending on the scope of the survey. A local median price may therefore be different from that of a regional, state or national price. For this reason you should beware of median prices being quoted for your suburb alone.
In recent years we have all seen property values soar throughout the country when taken in comparison to price movements in the 1960’s,’70’s and ’80’s. For this reason many householders began believing that they were owners of an ever growing asset where the sky was the limit. Even the recent threat of recession that followed the Global Financial Crisis (GFC) failed to make any sizable dent in people’s expectations.
The reason for the need to beware of median prices for your suburb is that the median house value can be inflated artificially by many factors such as:
- The amount of new buildings being constructed, including renovations in the vicinity of your home.
- The number of sales taking place in your particular suburb during the time of the survey.
- The type of buyer taking up homes in your suburb ( new home buyers or renovators etc.).
Some experts in the housing industry argue that it is often more reliable to take notice of individual house sales in your own suburb yourself over time, rather than to rely on published median house prices that may have been influenced by some of the above happenings during the period of the survey.
When undertaking your own survey because of you being beware of median prices for your suburb you may well take particular notice of the following points:
- Compare individual sales of similar properties over a period of time.
- Calculate the rate of growth between the sales.
In this way you can reduce the influence the effect any new building activity or surge of sales, through any First Home Buyer incentive, may have had in influencing any median price that had been determined for the same area. Price differentials of up to 10 per cent have been found to occur when making comparisons in this manner.
It is therefore advisable to only use median house prices as a point on where to begin your investigation into the true value of homes in your particular suburb.
Beware of median prices for your suburb – Home values showing signs of falling.
It is now being reported that house values are beginning to fall, a feature not seen in Australia for the last 17 months to July2010. Last month alone (July) we have seen the average house price across the nation fall by 0.7 per cent, except that of Adelaide. This downward movement has been blamed on the readjustment upwards of interest rates after their historically low levels reached during 2009 because of the GFC.
Housing expert, Tim Lawless of RP Data, however has stated that this tightening in the market is not surprising to the industry as the ‘writing was on the wall’ as witnessed in the downward trend of auction clearances and finance commitments falling generally. He noted this has suggested demand in the market place has been abating.
Most experts don’t expect the downturn in the median price to last long, at least not while the national housing shortage continues and this is not going change significantly in the foreseeable future. When looked at in annual terms Australian house prices are still 10.5 per cent above that of a year ago.
Beware of median prices for your suburb - Is the bubble real?
It has been a popular discussion point in Australia over recent time to argue when and if the housing ‘bubble’ would burst, if in fact any such ‘bubble’ existed at all.
An American financial expert, Edward Chancellor, has estimated that house prices in Australia are valued at 50 per cent above their real value, whereas The Economist magazine has been reported as stating that Australian properties gave the poorest return on investment out of the 20 countries it considered. Throughout all this it remains true that the nation is experiencing a dire housing shortage and while this situation exists house prices can not be expected to fall over any extended period.
Related posts:
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- Woodridge Is Now The Most Affordable Suburb In Australia
- Housing prices expected to remain expensive until 2020
- Median Sydney home price to top $1 million by 2020
- Melbourne Property Prices Trends
- Silver lining for borrowers as new home sales fall
- Melbourne House Prices
- Capital City Properties Experience A Modest Increase In Price
- The Comeback of the Housing Market
- Perth Property Prices to Soar on Back of Mining Boom
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