Melbourne's median dwelling price hits $610,000

Melbourne prices grew 1.5 per cent in February and 13.1 per cent annually, according today's CoreLogic data release.

Current median dwelling prices across Australia:

Core Logic Feb 2017 Median House Prices by KateAshmor posted 1st Mar, 2017 at 2:01 PM

 

Honestly with CoreLogic's hedonic index I can't take anything they post even remotely seriously.

Unlike the ABS, APM, Residex and other providers (which rely on sales prices to calculate growth in sales prices, either via a median sales prices or repeat sales - both of which need houses to in fact sell and for more money in order for values to rise) CoreLogic's index can and does impute price rises even to houses that don't sell - even to houses that haven't sold in decades. It basically puts a bunch of houses in a "cell", usually a suburb, and then with a complex calculation it takes a number of subjectively chosen hedonic factors into account in determining homes values. These include things like whether homes are new, the number of rooms, what other houses sold for in the same suburb etc.

So something truly worrying is they take construction and renovation as "growth" even in the absence of sales. If you plonk in some apartments or a renovated house sells in an old suburb, the "growth" in values brings the value of all other houses up. This is a problem in a market undergoing a construction boom, because even in the absence of recent sales house prices can "rise". It's why hedonic indices aren't commonly used in real estate - they have a lot of flaws. (The main advantage is you can calculate changes daily instead of waiting for actual sales prices which, if your business is flogging real estate data, is helpful).

This is why for example the ABS can have national house price growth on 3.5% and Sydney on 2.7% while CoreLogic has Sydney's growth on over 18% and nationally almost 12%. The former is counting the median of sales prices over a year, the latter is counting the change in its index. This is why the RBA dumped them as a data provider and said they'd overstated growth.

 

Was only today they were going on about record growth, am thinking, right, where ?

 

Thanks for the insight.
Do you have any links to other more accurate reports comparing capitals?

 

@Whitecat I just use ABS and Residex. They use two very good data methods. e.g. here's the ABS's last release.

ABS (also APM) use averages. Specifically the ABS uses a weighted mean and APM use a stratified median which CoreLogic used to use before their (basically unannounced!) methodology switch in May 2016. Both of these methods are reliable because they add up all the actual sales prices then average them (the ABS weights them by discounting certain very large and small values so the results aren't skewed by the occasional mega mansion that doesn't really represent the market and would cause wild fluctuations).

Residex uses repeat sales which is also fairly reliable especially if you look long term. Basically that works by taking the sales price of houses that have sold previously and averaging those - so again, it still relies on actual physical sales prices that in fact happened.

@dabbler the whole CoreLogic issue makes me so cross because they are almost universally reported by the media. It is incredibly frustrating. When you read their media statements you notice they are careful not to say "house prices" rose. No, they say "dwelling values" or "the monthly hedonic index rose further".

I mean even looking at their median should tell you something suss is up. In 2015 they were publishing monthly results over $1m. Last year they were publishing monthly results with medians in the low $900s, high $800s. Last month it was $850k. Now their monthly median values are starting to dip into the $700s (for Sydney). So month on month, it

So here are their last series of medians (like the one above. You can find the monthly ones published on their website each month with their hedonic index results table)...

This month for Sydney (in thousands) $795, Jan $850, Dec $852, Nov $845, Oct $800, Sep $785, Aug $780, Jul $775 - June I couldn't find, but that was quite close to their data change.

But get this. Let's go with that data series above, which is 8 months of medians - the difference between the highest and lowest is 9.9 ******** percent. The difference between the mid-year value last year and the current value is 2.58%. The median over those 8 months is $810k.

The Sydney median hit $1m according to CoreLogic in May 2015 - and what's the difference between $1m and $810? Because it sure as hell isn't positive 18.4%. In fact it's minus bloody 19%.