Many specific terms are used when analysing and commenting on the property market.
Having an understanding of these terms is important for anyone who is looking to enter the property market as a tenant, owner–occupier or investor.
One frequently used term is ‘median’.
The median value is the middle price in a series of sales, where half of the sales are of lower value and half are of higher value.
For example, if 15 sales are recorded in a suburb and arranged in order from lowest to highest value, the eighth sale price is the median price.
Median prices are used rather than average prices because median prices are unaffected by a few unusually high or low prices, making them a more accurate indicator of true market activity.
Along with the Victorian Government, the REIV uses medians when discussing and reporting property prices.
Of course, medians do not describe the value of every home in a suburb; rather, they serve to show how prices may have generally changed.
In that way, they are a guide only.
The sale price for each home will still depend on the home, the vendor’s preferred price and the level of competition between buyers.
When looking at a median price, be aware of the number of sales on which it is based.
The lower the number of sales the more variable the figure will be.
This is why the REIV notes with an asterix those suburbs where the median is based on fewer than 30 sales.
This provides the public with an additional tool with which to understand the data.