SHORT-TERM MEDIAN PRICES POSE CONCERNS

21st January 2007

Recent reports have prompted a warning from property experts about the reliability of short term median house prices.

Property Wizards Buyer's Agency managing director Liz Sterzel cautioned buyers against placing too much weight on quarterly median prices in particular suburbs.

"Investors need to remember that when only a small number of homes are sold in a suburb in a 3-month period, it can create artificial fluctuations in median house prices," she said.
"Some people can look at quarterly figures, which often show up and down movements, and incorrectly assume the suburb is not a good investment option or, conversely, think that it is a good opportunity when it actually isn't."
Ms Sterzel said median prices were best used as a long term measure of growth.
"Over the short term, median prices can be greatly affected by the number and also the mix of houses sold in the time frame, so sometimes they don't give an accurate picture," she said.
"For example, in 88 percent of Perth suburbs, the December 2006 quarterly median house price figures are based on the sale of fewer than 30 homes - which is a small sample - indeed, 75 percent of suburbs have had less than 20 sales and 43 percent have had less than 10.

"The main thing for savvy investors to remember is that looking at median prices over the long term is the only way to establish the real growth of a suburb, free of artificial fluctuations."

For more information, please contact
Mr Trevor Dunkley
Director
Property Wizards
trevor@propertywizards.com.au
Tel: (08) 9381 7450