n the dynamic Victorian real estate market, reliance on quarterly median prices to gauge the health of local markets and guide decisions in property transactions may prove folly. Recent data from the Real Estate Institute of Victoria (REIV) highlights significant growth in house prices across regional Victoria and metropolitan Melbourne, with towns like Lakes Entrance and Jan Juc, and suburbs like Brighton experiencing substantial quarterly rises, as much as a 35% increase in median house prices. No one is disputing the accuracy of the data collected and analysed by the REIV - their insights are incredibly value. However, while these figures present an appealing snapshot of market vitality, they often do not tell the whole story.
Quarterly median prices can be heavily influenced by a variety of factors that do not necessarily reflect the overall market conditions. For instance, a small number of high-value transactions in a particular area can skew the median price upwards, while a similar number of lower-value sales can do the opposite. In East Melbourne, we have witnessed quarterly changes in the median value of properties of more than $1 million. This quarter, Melbourne’s perennial blue-chip suburb, Toorak, was dethroned as the most expensive suburb by Brighton. Even though Brighton is a stunning area to live in with magnificent homes, no one will genuinely believe that it is a more expensive suburb to buy property in than Toorak. Variances of this magnitude make it difficult to draw accurate conclusions about the true state of the market from a singular median figure for a single moment in time.
These statistics often reflect the types of properties that happen to sell during that quarter rather than the overall market conditions. It is not uncommon to see a chain of similar properties sell based on the psychological security owners experience from seeing properties comparable to their own selling within the neighbourhood. In periods when higher-end homes are sold, the median price will naturally appear higher. Conversely, if the market is more active at the more affordable end, the median price will seem to decline. This aspect makes median prices a volatile metric that can change significantly from one quarter to the next without genuinely indicating long-term trends.
The focus on regional centres in the REIV's report underlines another critical point: regional disparities. While metropolitan areas might see different trends, regional centres can perform distinctly based on local economic conditions, changes in amenities, and shifts in buyer preferences towards more lifestyle-oriented properties. Similar disparities can also exist between neighbouring suburbs, whether the announcement of new housing development or the planning of big infrastructure - properties on either side of a single road can experience radically different levels of interest. These local nuances are often lost in the broader data, leading to potentially inaccurate assumptions about more comprehensive market performance.
A common refrain of our weekly blog is: make sure you consult with a real estate professional before making a decision about buying or selling a home, their expertise will help you make an informed decision that could save or secure you a significant amount of money.