Median prices only show where the market is performing

Media Release 18th April 2013

Median prices only show where the market is performing

Reported record median price rises do not always indicate what is happening in the market. “Median prices only show where the market is performing” states Colin Wilson from First National Guardian Real Estate Wellington.

“If the median price is high, then this shows activity at the upper level, if the median is lower it shows activity in the lower range of the market”, he said.

First National Golden Bay’s Sharon McConnon also confirms that median prices in her region are not an indication of where the market sits. Although First National Golden Bay has a market share of approximately 60% in this region, Sharon states that she can have ‘three sales at $230,000, one at $480,000 and one at $650,00, however the median price of $230,000 will be the median price reflected for this region’ (unadjusted). “This only reflects which section of the market are buying at that time” she said.

“Real local knowledge of the local real estate market is the essential element when purchasing a property”,states Colleen Milne, General Manager First National Real Estate.

“We have offices from Kaitaia to Invercargill and our First National Residential survey results indicate two things - a shortage of listings and it’s a sellers’ market across most regions. In other words, the survey response indicates the median price does not form a true representation in many regions.

“The median price is used often when reporting the mid-point and is said to represent where most people buy” said Bob Brereton, First National Chairman and principal of First National Motueka. He believes some people are influenced by the hype of the Auckland and Christchurch market and that the median price can also put people off purchasing, where as this not always a realistic indicator.

“In Auckland it is reported that there has been a 38% rise in the number of sales in excess of $1,000,000, this will significantly skew the data as this is far removed from the average sale” he said

In summary, the regulatory decisions relating to property increase as well as a potential early increase in the OCR means a cautious approach should be taken, if using either median house prices or Auckland and Christchurch as the indicators.
ends

© Scoop Media