It is so important that when we think we're comparing Apples with Apples we really are doing just this. This is where the Median House or Unit Prices can really confuse people that accept what a media reporter who is uneducated in Property tells them in an article or post. A Median Price is only an activity indicator! Won't that surprise many of the people that are posting about our Real Estate industry.
There are 4 key factors I want to highlight here:
- The actual value of any given property is based upon the exact same properties current sales results in the same or very similar region. Nothing to do with the Median House Price.
- When lending tightens as it presently has this will mean less people are able to reach the higher or what we classify as 1.5 x Median & Above Level, which means that there will be less activity at the the top end of the market place. This means the activity point moves down, but has actual value fallen............ mostly no or very little as we need to verify the value against Point 1, what current sales of the same property/similar are reaching in the current market.
- Projects, developments and Infill Properties can cause a Median House to fluctuate as again it is activity based. If these sell higher or lower can influence the direction of the Median Price in the area either higher or lower accordingly. Again it doesn't change the value of your property, it is just activity.
- Auction results, that so many in the media pin all their hopes and dreams upon are again only an indicator and with a tighter lending in place will mean less can actually go unconditional as required under an Auction contract.Thus we see the properties that now should be taken to Auction are greatly reduced in numbers. Estate Agents love Auctions as it gives them promotion and has an end finish date for decisions. This is also driven by the media as when marketing these properties the vendors promote their properties strongly spending more advertising dollars with the media outlets.
When we complete a Property Rating Report we only use a Median Price as a discussion point. We complete our own direct compraisoms in a similar way to a valuation, although we analyse the property in full not just current value. We go back looking at past, present and future for the location and the specific style of property based upon all the key maximiser elements for the property. This results in a score out of 100 based upon many factors which when combined provide the most comprehensive property overview available today.