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When you do you your research about buying or selling a property, it’s important to know which metric to use to be as informed as possible, as CoreLogic’s director of research explains.
To buy or sell a property, investors need to first do their research. But with both median house prices and median house values, which measurement should people pay attention to?
Speaking at CoreLogic’s launch of its new generation home indices in Sydney, Tim Lawless, director of research, said both measurements are just as important, but are dependent on whether you’re buying or selling.
“If I’m measuring how the market’s performing, I’m always going to look at how values are changing, rather than prices,” Mr Lawless said.
“But if I’m pressing with something to sell a property, I want to know what sort of prices are people actually achieving in my immediate vicinity.
“A median price in that measure is a real useful and practical statistic to be using.”
While median prices are useful, Mr Lawless also said median values still have a place when selling a property.
“Since I bought my property 10 years ago, how much have I heard, how much has it appreciated in value, I wouldn’t be looking at a 10-year change in the median price – that’s not going to be reflective of how much equity I built on my property,” he said.
The difference, according to Mr Lawless, comes down to the complexity of each measure, and over what period of time.
“[For] median price, that’s a great example for a real estate agent to say, ‘Well, the median price in my area is X’, … people understand it really easily,” he said.
“[However], the median price really shouldn’t be used on a time-series comparison because it can be volatile over time, and it’s really not reflective of true capital gains.”
Median is the middle point or value in a sorted, ascending or descending, list of data.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.