Median house prices seem to be the best way to check on how the property market is travelling.

Certainly, these figures are everywhere we look.

And it can continue to be this way - to an extent.

You just need to be well aware that everything is not what it seems when it comes to median house prices.

Let's take a look at the ins and outs of this oft-confused figure.

How are median house prices calculated?

Firstly, a median house price by an average name won't smell as sweet as the latter.

Why?

While they're similar, they're not one and the same thing.

An average house price - just as with averages in general - is the total value of all sales in an area, divided by how many houses were sold.

So, for example: three houses in a suburb that have sold for $450,000, $725,000, and $890,000 equals an average suburb house price of $688,000.

However, a median house price is the price of the middle sale in a list of sales for a suburb, with this list quoted in order from lowest to highest.

Therefore, in a list of 13 sales in a suburb, the median house price will be that of House Number 7, as it will have six lower-priced sales above and below it.

Of course, house price lists are rarely this neat but you get the drift, right?

We like how one article we read from Suburb Finder describes median house prices: 

"The median value represents the middle area where most of the sales congregate around." 

Why are median house prices used more than average ones?

Well, in Metropole's Michael Yardney's own words, "Technically speaking, the median price is more accurate than the average because it is less affected by a few unusually high or low sale prices."

Mr Yardney adds that median prices are a "useful tool" for understanding property price changes within a certain market's transactions, and can also reflect sales activity.

Certainly, we at Listing Loop have nothing against median house prices per se, and they can make life easier for buyers who want a quick rundown of a typical price for an area - which is why industry analysts such as CoreLogic always quote such prices, rather than the average.

Why should I not trust median house prices?

One key reason: median house prices are only one detail in a wide pool of research you should be undertaking when buying or selling a property.

And whether it's median or average house prices, you should never rely on just one source of information when doing this.

So wherever you are in the property market game, ensure you reflect on the following when it comes to median house prices:

• capital cities and even smaller, regional cities will never have similar house prices and sales across the board

For example, western Sydney prices will be completely different from that of say, the north shore suburbs.

Plus, the same suburbs, or areas, can feature different infrastructure, schools, and other amenities, all of which affect property prices.

As well, remember that some areas may always have a small number of sales while other adjacent areas may be just the opposite, thereby affecting median house prices even further.

In this way, offering median house prices for Sydney, Melbourne, and Brisbane - and that's just a start - as CoreLogic does every month in their Home Value Index (HIV) report - is just a tad crazy, we think.

But as we said, this information certainly doesn't hurt.

• median price increases don't necessarily equal property value increases
  

"A 10% median house price increase does not necessarily mean that your property is worth 10% more," Mr Yardney says.

"In fact, your property could have dropped in value during this time.

"If a number of multi-million dollar homes came onto the market and all sold the last month, this would raise the median price – however, the value of your more moderately priced home may not have changed at all."

Ouch.

Harsh, but true.

• always research other statistics, data, and property information over an extensive period of time

Local sales volumes, market depth, and investigating ‘like for like’ recent sales to estimate current property values are all highly valuable information, says Mr Yardney.

"Data will only get you part of the way - you must complement data with local area knowledge and expertise," he adds.

Time matters too in the property market so don't just take month-on-month median house price changes as long-term promises.

Plus, don't forget points such as rental yields and the search interest volume of your preferred area, Suburb Finder adds, as well as days on the market, vacancy rates, and annual and long-term capital growth.

• median house prices from other sources can be different 

Different sources can use different data details to crack their median codes including time frames (daily, monthly, or quarterly), data points, time frames, and index methodology.

Mr Yardney gives CoreLogic the thumbs up for its HIV reports as unlike many other industry groups, "it seeks to overcome some of these issues by measuring the attributes of properties that are transacting as part of the analysis".

Suburb Finder agrees somewhat in that it advises such discrepancy issues can be avoided "by using standardised data sets or real estate data sources which consider the attributes of properties being transacted".

Where median house prices can help

Finally, there are certainly places where median house prices can help buyers and sellers.

Think suburbs comprising similar properties in terms of quality and sales numbers as well as nearby infrastructure and amenities.

But even in these areas, you shouldn't rely solely on median house prices to assist with your next property purchase or sale.

"Median prices are really best used as an indication of the composition of sales, rather than a good indicator of changing property values," Mr Yardney says.

Suburb Finder concurs saying that areas where there are plenty of evenly spaced, sale prices can ensure median house prices are less likely to be affected - "unlike average values that can be skewed by abnormally high or very low sales."

We’re here to help

The property world can be a stressful one but remember, we're always happy to help with all the dramas and stressors of house buying and selling.

And if you're particularly tired of house-hunting, we've even partnered with buyer advocates who can check out homes for you and organise sales assessments and negotiations.

Our off-market and pre-market marketplace gives you VIP access to properties so you can get in first.

Just sign up at Listing Loop or download our app.