Property statistics can be misleading
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When the news media report that the median house price in Auckland has risen 13% over the past year, from $562,000 last March to $637,000 – that’s an increase of over $6,000 per month!
This type of property news infers that property values are rising, and rising fast; as it's getting more expensive to buy houses – that would be a good interpretation – right?
Well actually no. You cannot make that inference. To hear that the median sale price is rising does not infer values are rising by the same amount.
Now you may consider that I am arguing semantics. However, I regard the difference between the rise in property value and the rise in median sales price as highly significant. It's a significance that too often seems to be ignored or glazed over for the sake of a good headline.
The median price is a statistic calculated from the aggregated data of all the properties sales in a month in an area – a suburb, a region or the whole country. It should not be taken as an indication of the likely trend in value of a property in that self-same area.
Each year just less than 5% of all properties are sold – that is 1 in 20, which tends to amount to less than a handful of properties on any given street around the country. The fact is that these properties recently sold might not be representative of all of the properties on the street in general.
This type of property news infers that property values are rising, and rising fast; as it's getting more expensive to buy houses – that would be a good interpretation – right?
Well actually no. You cannot make that inference. To hear that the median sale price is rising does not infer values are rising by the same amount.
Now you may consider that I am arguing semantics. However, I regard the difference between the rise in property value and the rise in median sales price as highly significant. It's a significance that too often seems to be ignored or glazed over for the sake of a good headline.
The median price is a statistic calculated from the aggregated data of all the properties sales in a month in an area – a suburb, a region or the whole country. It should not be taken as an indication of the likely trend in value of a property in that self-same area.
Each year just less than 5% of all properties are sold – that is 1 in 20, which tends to amount to less than a handful of properties on any given street around the country. The fact is that these properties recently sold might not be representative of all of the properties on the street in general.
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