If you’re thinking about selling your home, (or buying a property for that matter), it’s always a good idea to see what the market is doing in your local area.
To get a measure of how an area is performing, two figures are often quoted – the mean (average) sales price and the medium sales price. Generally, the higher these figures are, the better it is for someone selling a property as it means property prices are up!
Both these figures do give you an insight into the local market, but you do need to know the difference between the two, and why the figures may not always accurately reflect the market.
Mean (average) value
This sale price value is calculated by adding all the sale prices for properties sold in an area within a set timeframe and dividing that total by the number of properties sold.
For this figure to be of real use, it makes sense to use as many properties as possible, and ideally over a period of at least a few months rather than a couple of weeks.
Let’s for simplicity’s sake, say five houses have sold in an area for: $500,000, $560,000, $800,000 $360,000, and $400,000.
Add all the values ($500,000 + 560,000 + 800,000+360,000 + 400,000 = 2,620,000), and divide this figure by 5.
The mean price is $524,000
This sales price value is the middle figure when you arrange all the sale prices from the lowest to highest.
Generally, a median sales price is measured over at least 12 months, using at least 10 sales, however it is better to use more sales figures.
Using the same figures as listed above, arrange the figures from low to high, $360,000, $400,000, $500,000, $560,000, $800,000 and use the figure in the middle.
The medium price is $500,000
Which one is better?
Like everything in property, it depends. There are factors that affect both figures and if you’re only relying on one, you may not get a true picture of what is going on.
For instance, if you’re looking at the mean price, if one or more properties in the area sell at a really high or low price, the figure is skewed towards that higher or lower figure.
If your considering a suburb where houses are mainly three-bedroom properties or more, a new development of cheaper two-bedroom properties may make the median sales price lower. The price maybe skewed towards a higher figure if the new development is made up of far more expensive luxury four-bedroomed houses.
When you’re selling a property, to get a real feel for the market, ideally you should look at both prices, and look at the figures over a few months or years.
Ultimately, your property will sell at a price someone is willing to pay for it at that time. They may pay more than the asking price because it’s in a desirable location or because it has unique features.
Want to know more about mean and medium prices in your area? Or do you want to know more about an area in general? As we’ve been successfully operating in the area for over 40 years, we have lots of data available for suburbs in the Cardiff and Newcastle region.
We believe we go above and beyond expectations which is why we are one of Newcastle’s longest established real estate companies. Give us a call on 02 4954 8833 or pop into our Cardiff office for a no-obligation chat.
And don’t forget to check out our Facebook page for handy tips on selling your property or what to look for when buying a property.