Median price changes are often quoted in the press and I am sure some property investors use them as a guide for their investment decisions.
Just to highlight how flawed this data can be – I was reading the WA Property report in Sunday's paper. Ardross was listed as the best performing suburb in the south of Perth with a price increase of 8.7% over the previous 12 months.
8.7% increase was based on 29 sales. What the report did not mention was 29 sales represents approximately 2% of all properties in Ardross.
Out of interest Derby was listed as the highest growth area in WA over the last 12 months with growth of 90.3%. Yes that is right 90.3%.
This figure was based on 16 sales which represents 1.7% of the total Derby market.
So message is use median prices with care.
Yep, I was looking at property online in Dunedoo, a small town in central west NSW.
Was surprised the medium price was $220 000. Seemed a bit expensive, until I realised it was based on only one sale.
Even if there are a large number of sales there is always the risk that the median has been
skewed by new developments dumping better than average properties into the mix.Yes medians are to be used with care if at all, same with a lot of data, historic growth rates is another I see used and abused often with the unspoken assumption usually being suburbs with higher rates will make better choices in the present.
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