When to be cautious of mean and median

Posted by

After much speculation that the Western Suburbs prices are on a downward trend, property consultancy firm PropertyESP has undertaken a detailed analysis of Mosman Park, Cottesloe, Applecross, Peppermint Grove and Dalkeith to see the true story behind the sales.

The company has found that over a two year period (January 2012 to September 2014), the suburb of Mosman Park had several peaks and troughs, including a price spike in September 2013 quarter of 27% and another in January – June 2014 of 32% (14% + 18% respectively). In contrast the area experienced a median price decline in the December 2013 quarter of 32%.

Median house prices Mosman Park January 2012 - September 2014
Median house prices Mosman Park January 2012 – September 2014

But as Samantha Reece, Director of PropertyESP states, this was because of the types of houses that were available for sale and not the ongoing trend.

“The median price in June 2013 was $1.4 million and this increased to $1.7 million in September because there were more four bedroom houses (65%) sold in this latter quarter and the average block size also increased from 595sqm to 746sqm,” Ms Reece said.

june quarter

“In contrast the 32% decrease we saw in the December 2013 quarter was due to the average block size sold decreasing from 746sqm to 527sqm and 55% of the houses sold were 1-3 bedrooms.

“This is why it is essential that property buyers don’t just look at median and mean as an indicator of a suburb, but rather the data behind the numbers.

“Furthermore, when you don’t have a high volume of sales, and in Mosman Park’s case, an average of 34 sales per quarter, then median house prices can fluctuate widely from one quarter to the next.”

PropertyESP is a newly formed company that seeks to drill down into the figures and provide the why for property movements.

“From the recent news, buyers would assume that the Western Suburbs is in fact depreciating in value but when you have such a wide variation of property types and a small number of sales, you really need to look at the individual sales, the quality of the homes and even the views to work out what is truly happening,” Ms Reece said.

“We have formed PropertyESP because we want to provide the full picture and give buyers accurate data and so that their decisions are more thought through.”

The company will be providing free regular blog posts about these kinds of insights and property buyers can register at www.propertyesp.com.au.

“At the end of the day there is so much information about property and we just want to provide the data, that helps make sense of it all,” Ms Reece said.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s