What median sale values can really tell you: Robert Larocca

People are generally very familiar with median sale prices, they are the middle value when all sale prices are arranged from highest to lowest in a suburb. They allow you to compare demand in an area but do so by reference only to the homes actually sold.

Another useful metric for buyers and sellers is median value. The median value is middle value when the estimated valuation of all properties are arranged from highest to lowest.

Because the median value is based on the value of all properties it is a more stable measure than the median sale price. Median sale prices can be quite volatile due to the small number of sales – particularly in small suburbs and also due to differences in the actual homes sold.

A good example is the market for houses in inner city Fitzroy. Its median sale price in the 12 month ending June was $818,375 and this was based on 82 sales. This compares to its median value from the RP Data Suburb Scorecard of $873,033, based on the 2,347 house in the suburb.

For buyers and sellers this suggests that sale prices have been at a discount over the last year which is a reflection of the market being below its peak, and also an indication value can be found.

Now like all property data its very informative but it won’t tell you what a home will actually sell for because that is ultimately set by the market – what the sellers are willing to pay and the buyer willing to accept.