If buyers decide to add to their portfolio solely based on median prices alone, the Real Estate Buyers Agents Association of Australia (REBAA) warns that doing so could be a huge mistake.
REBAA president Rich Harvey said the available tools that calculate median suburb prices are imprecise and should not be used on their own, and instead suggested comparable sales data to determine the viability of an area.
“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,” Mr Harvey said.
“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.”
For example, Mr Harvey said usually median house prices are impacted by the type of housing purchased at specific times in specific areas, which can vary greatly from quarter to quarter. Instead of looking at a snapshot in time of a few months, potential buyers should be looking at data over years.
REBAA QLD representative Zoran Solano said these impacts are most notable when looking at capital cities, especially Brisbane.
“Brisbane capital city median house [prices] 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 include the city of Logan and the city of Ipswich which have a much lower price point than the inner-city.
“These [prices] effectively pull down Brisbane’s median residential property [prices] to accommodate these multiple cities creating a false average.”
It’s also important to consider that smaller suburbs, geographically speaking, could have a smaller number of sales, which can skew perceptions of suburbs appearing more successful than they actually are.
“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,” Mr Solano said.