Median house price - REINZ

This chart tracks the monthly median house price. The data is sourced from the REINZ, and is disclosed regionally.

The 'median price' is the middle price. It is different from the 'average price' (also known as the 'mean price').

For example, the median is the series of numbers 1,2,4,5,16,25,40 is 5 - that is the middle number. But the average of that same series is 13.29 - where you add them all up, and divide by the number of them.

There are advantages and disadvantages for reporting the median, but over time it has become common practice worldwide to report market benchmark prices as the median.

Be careful when you see other house price reports - they often report 'average', and this can be moved more easily by a few outlier prices especially when volumes are low. Real estate agents typically report 'averages', as does Quotable Value.

On the other hand, 'median' prices can mask market shifts sometimes, at least for a short while. Also remember, the prices listed are not 'what is available in the market', only the median of what actually sold.

One advantage the REINZ series has is that it reports prices as soon as a sale becomes unconditional. Other measures that rely of formal title registration can take longer to reveal market changes.

A further point to note is that 'median price' is of all types and specification of houses sold. The range will include small shoebox apartments all the way up to palatial mansions. The REINZ series makes no distinction. In fact, nationally, the 'middle price' might be a house in the Waikato one month, and one in Wellington the next, for example. There is no filter that means it will always be (for example) a 3 bedroom, 1000m2 section, or in fact any standard.

To attempt to overcome some of these issues, the Reserve Bank and the REINZ have started a modified house price series, called the 'stratified index', although it is only available for the three main centers, and the 'rest of the North Island' and the 'rest of the South Island'. It is a start towards a better basis, but only a start.