When you’re doing your property research to see what kinds of prices homes around you are selling for, two terms that crop up all the time are ‘average house price’ and ‘median house price’. They are similar in that both figures aim to give an idea of the middle-of-the-road property value but are calculated very differently and the results can vary significantly.
Here’s our guide on how to tell average property price from median property price, and how to evaluate the property price data you see in the papers:
What does average house price mean?
The average house price is calculated by adding all the property prices within a certain area and a specific time frame together and then dividing the total by the number of properties. So, say you wanted the average value of Sydney house prices in 2017 – you would take all the properties sold in Sydney over that year, calculate the entire value of all sales and then divide that total by the number of sales.
This gives a guide price that’s not necessarily representative of actual house prices, but is rather a rule of thumb. If you’re calculating or reviewing average house prices, remember to:
- Compare like for like: compare houses with houses rather than with apartments.
- Get as specific as you can. Melbourne property prices vary a huge amount, so it might be better to narrow your search to just Williamstown real estate to get a much more accurate sample.
- Remember that there are outliers that can skew the results up or down – you may want to exclude extremely high or unusually low prices.
What does median house price mean?
The median house price is more representative of the ‘middle’ – it’s the price at which 50% of properties are more expensive, and 50% are less expensive. This can be a more representative number to use when calculating the value of your property since there will naturally be a bell curve at the middle that represents the point around which the majority of property prices cluster.
Average house price vs. median house price: which is better?
Both figures can be useful when valuing property for sale or to purchase, but it’s important to be aware that they are different and that averages can more easily be dragged up or down due to extreme outliers.
It’s worth reviewing both when selling your property so that you can make an educated decision about how much you might expect for your home when you put it on the market.
To get an expert property appraisal from a real estate agent who understands property values in your area, get in touch with us today. You can also quickly request your free online property value report to get a feel for what your home may be worth based on recent sales data from properties in your suburb.