The truth about median house prices
If you read last Saturday's Courier Mail in Brisbane you would have seen a section printed about Brisbane wide median house price statistics set out suburb by suburb. It showed that in some of Brisbanes best suburbs there had been significant (double digit) percentage falls in median house prices from the twelve months to the end of September 2008 to the twelve months to the end of September 2009.
If you had bought in these suburbs, (which included Ascot, Clayfield, Bulimba, Hawthorne, Paddington, New Farm and St Lucia) you could be forgiven for thinking that the value of your property had plummeted, however the opposite is probably true. It means that the lower end of the market in those areas has been more active and those have been the properties selling, which in turn drags the median down. The activity at the lower end is due to the record low interest rates and the concessions given to first home buyers and these first home buyers wanting to buy close the city.
The moral of this story is that median house price statistics should not be used as a true guide to growth, like they are touted in the media a lot. They should be used as a guide to which way the market is trending at a particular time. Over a longer period of time this trend can be used to indicate growth in the median.