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REIQ Journal : September 2008
16 FEATURE ...even though it appears some data has Nicolla McDougall, Deputy Editor, REIQ Journal In basic terms, the median is the middle sale price when all the sales transacted are arranged in ascending order, so half of the sales transacted were greater and half were less than the median. For example, an examination of sales in the Brisbane suburb of Chelmer in the March quarter 2008, shows a difference of more than $500,000 between the median and the average (see table). As a rule, the REIQ only publishes medians when a minimum of 10 sales have occurred in a metropolitan locality or a minimum of seven sales have occurred in a regional locality. Localities with fewer sales are generally regarded as having a sample size too small to be truly demonstrative. PDS head of research analysis Kent Lardner said people should always consider the number of sales included in research data. “One important consideration is not to read too much into data when the sample size is too small. If an investor is analysing a market with relatively small turnover, many of the standard statistical methods are flawed,” he said. “Property investors can now access more information on a particular market than ever before in Australia. To gain a stronger appreciation of the local market, the key trend data of total days on the market, total listings and auction clearance rates are most often used. These trends often have a significant correlation to price movements in the medium term.” Due to the delay in availability of sales records on QVAS, REIQ preliminary figures are based on about 60 to 70 per cent of sales contracted in the quarter. Therefore, the percentage change reported in REIQ figures compare current preliminary figures with preliminary figures for the previous reporting period. scared off buyers, it is clear the more seasoned investor has done their research and is far from frightened of what the future holds. HOUSE SALES - CHELMER March Quarter 2008# Address: CRAWFORD RD HARTE ST LEYBOURNE ST HONOUR AV HARTE ST RICHMOND ST LAMA ST LAUREL AV Sale Price: $580,000 $627,000 $670,000 $760,000 $880,000 $1,015,000 $2,650,000 $3,980,000 MEDIAN (middle point)$820,000 AVERAGE (volume of sales / number of sales)$1,395,250 #Based upon sales records available as at 14 Aug 08 Source: REIQ This ensures the same proportion of sales volumes are compared each quarter. This level of sales data typically becomes available around seven weeks after the end of each quarter. “Quarterly statistics can provide a good indication of recent sales activity and what types of properties have sold in a location,” Mrs Burton said. “However, due to the short reporting timeframes and the subsequent low number of sales, quarterly medians can be volatile and show fluctuations if there is a higher than normal number of very high or very low priced sales.” Wherever possible, REIQ statistics include footnotes to explain any unusual fluctuations, which are commonly caused by varying quality of stock; varying numbers of new property sales; and varying numbers of prestige properties sold. Median sale prices for a 12-month period, on the other hand, are generally not subject to these REIQ Journal September 2008 fluctuations as they are based on a greater number of sales. Annual medians provide a more “trend view” of what has occurred within a location. “The most important thing for people to keep in mind is that while median sale prices provide a general indication of the overall performance of the market in a given location, they don’t necessarily mean that the value of every property in that locality has been affected exactly the same way,” Mrs Burton said. And even though it appears some data has scared off buyers, it is clear the more seasoned investor has done their research and is far from frightened of what the future holds. “One irony is that we’ve also had a surge of experienced investors coming forward, trading off the back of all the negative sentiment. Doom and gloom is usually a magnet for investors who know that capital gains are likely if you do your homework,” Mr Donnelly said.