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Median prices a flawed indicator

05 June 2014 Staff Reporter

Median price data has no bearing on individual property values, an award-winning buyer’s agent has cautioned.

Simon Pressley from Propertyology issued the warning in response to RP Data findings that median prices dropped in capital cities in the past month.

“Changes in median values often don’t provide an accurate reflection of actual changes in property values,” Mr Pressley said.

“It’s not like RP Data sends out an army of property valuers each month to conduct formal values on every property in the country.”

Rather, he said median values reflect the particular type and age of stock sold in the most recent period.

“Given that a typical new property is worth more than a typical established property, it makes sense that, if there were a lot of new properties sold in one market over a reporting period, the median value would be higher,” he said.

While investors may worry their property has lost value if the median price in their suburb drops, this is not always accurate, he said.

Mr Pressley believes more in-depth analysis is necessary to understand how the market is really performing.

“As for what is really happening across the country, Sydney’s market appears to be tapering after a 12-month strong run,” he said.

“The remaining capital cities, including Melbourne, have experienced price growth of between zero per cent and six per cent over the past year.”

He believes most capital cities will improve their performance over the next year, but warns investors: “Don't necessarily rely on reading that through future changes in median values.”

Median prices a flawed indicator
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