What median prices represent

The median selling price is a widely quoted statistic that is used to provide a measure of housing prices around Australia.

There are a number of different median prices which can be used whether it be based on a variation of methodology, geography or time period. At the suburb level, RP Data generally calculates a median price based on 12 months of sales. The 12 month time period helps to ensure a statistically reliable result based on a large enough sample size (we exclude any regions where there are fewer than ten sales over the 12 month period). The adjacent table details capital city median prices based on the 12 months of sales to February 2010.

Although this information details the city-wide medians it is interesting to understand those suburbs that have the same or a similar median price in order to better understand what the median selling price represents. Below we have provided the suburbs within each capital city where the median house and unit (which includes apartments and semi attached product) price most closely approximates the city wide median selling price.

Sydney: the suburb best representative of the cities median house price is Winston Hills, located in the Baulkham Hills LGA 23 kilometres from the CBD. For units, Enmore is the best representative market, it is situated six kilometres from the city in the inner west.

Melbourne: Reservoir has median house price that is closest to Greater Melbourne’s and Maribyrnong is best representative of the median unit. Reservoir is located 12 kilometres north of the city and has significant amenity close by whilst Maribyrnong is 8 kilometres north-west of the city.

Brisbane: houses within Nathan, 9 kilometres south of the CBD, are best representative of the Brisbane median house price. For units, Stafford provides the best fit with the median priced Brisbane unit and is 7 kilometres north of the city.

Adelaide: the suburbs which best represent the current city median are: Sheidow Park for houses and Cumberland Park across the unit market. Sheidow Park is situated approximately 18 kilometres south of the Adelaide CBD whilst Cumberland Park is located 5 kilometres from the Adelaide CBD.

Perth: Atwell houses are best representative of the city-wide Perth median whilst Churchlands units are best representative of the median priced Perth unit. Atwell is located 21 kilometres south from the Perth CBD and Churchlands is just 7 kilometres north-west of the Perth CBD.

Hobart: Sorell houses provide the best indication as to what constitutes the median Hobart house whilst the suburb of Austins Ferry provides a similar indication across the Hobart unit market. Sorell is located 24 kilometres north of the Hobart CBD whilst Austins Ferry is 14 kilometres from the city centre.

Darwin: the most representative suburbs of current Darwin median prices are Wagaman for houses and Rapid Creek for units. Wagaman is located just 10 kilometres north-east from the Darwin CBD, Rapid Creek is also situated 10 kilometres from the CBD but is situated north of the city.

Canberra: Stirling houses are most representative of the Canberra median house price whilst Page units are most representative of Canberra’s median unit price. Stirling is located approximately 10 kilometres south-west from the Canberra city centre whilst Page is found 9 kilometres north-west of the city centre.

These results highlight just how important it is to look beyond the median in order to get a true picture of the micro market when analysing property. The capital city median is a good macro indicator and provides a broad view of pricing relativity between cities, however if you are looking to buy a house within five kilometres of the city you can generally expect to pay a lot more than the capital city median price. Similarly, if you are looking to buy an older style unit in the outer suburbs, the median means very little. In saying this, it is very important to have a good understanding of what the median represents and once this is understood undertaking further analysis and determining the fundamentals of a particular property compared to the median becomes much easier. This type of analysis can also assist greatly when determining whether or not a property represents good value.

For the best understanding of value and pricing within a particular suburb or street, there is no replacement for comparing recent sales of homes that are comparable to the one you are looking at. Look for recent sales within the same street or surrounding streets, on similar size blocks of land, with similar attributes such as the number of bedrooms and bathrooms and with similar types of housing. Understanding the micro-market as well as the macro-market should be an essential part of your due diligence when hunting for a property.

Tim Lawless is the Director of Property Research at RP Data.