Post to Facebook on 3/1/2019 at 9:06 AM
Commenting on “Aussie property market facing the moment of truth”
https://www.theage.com.au/business/the-economy/aussie-property-market-facing-the-moment-of-truth-20190102-p50p8k.html
Posted to The Age (3/1/2019) on 3/1/2019
Commenting on “Aussie property market facing the moment of truth”
https://www.theage.com.au/business/the-economy/aussie-property-market-facing-the-moment-of-truth-20190102-p50p8k.html
According to Australian Bureau of Statistics (ABS) the inflation rate in 2018 was 1.26%. That is to say, a property worth $1,000,000 at the start of 2018 should have increased to $1,000,000 + $1,000,000 x 1.26% = $1,012,600 by the end of 2018.
According to many reports, median property price has dropped by 10%, or using the previous property of $1,000,000, it can only be priced as $1,000,000 - $1,000,000 x 10% = $900,000
Mathematically speaking, the 10% drop in price should be based on the inflated price at the of 2018; that is $1,012,600 - $1,012,600 x 10% = $911,340
So, what is the real drop in property price?
Let me show you how to calculate this:
($1,012,600 - $900,000) / $1,012,600 x 100% = 11.12%
Reported price drop does not refer to a specific property, but a sample of properties. If the sample consists of 1,001 properties of varying prices, and these prices are arranged in an ascending order, the price of the property listed the mid-point or 501st property in the list is known as the median price.
If the median price is $1,012,600, then 500 properties are sold for less than $1,012,600 and 500 properties more than $1,012,600. What median price does not tell are the lowest and highest prices. For all you know, the lowest price can be 20% less than the median price, and the highest 20% more. 20% is just an arbitrary percentage used for illustration only.
As you can see, median price is not the same as average price. Both median and average prices are used as a guide, and each property should be judged on its merit.
It is important not to be a smart Alec to tell the owners the property or their house is overpriced. To them, their home may be their castle. If you are interested in the property and want to negotiate, DO NOT upset the owner. Use a professional or real estate expert to negotiate on your behalf.
If you think the price is non-negotiable and not worth the price, walk away! One day, you may be in the same position, not prepared to negotiate with buyers who show interest in your property for sale in the market.
Thank you for reading.
Commenting on “Aussie property market facing the moment of truth”
https://www.theage.com.au/business/the-economy/aussie-property-market-facing-the-moment-of-truth-20190102-p50p8k.html
Posted to The Age (3/1/2019) on 3/1/2019
Commenting on “Aussie property market facing the moment of truth”
https://www.theage.com.au/business/the-economy/aussie-property-market-facing-the-moment-of-truth-20190102-p50p8k.html
According to Australian Bureau of Statistics (ABS) the inflation rate in 2018 was 1.26%. That is to say, a property worth $1,000,000 at the start of 2018 should have increased to $1,000,000 + $1,000,000 x 1.26% = $1,012,600 by the end of 2018.
According to many reports, median property price has dropped by 10%, or using the previous property of $1,000,000, it can only be priced as $1,000,000 - $1,000,000 x 10% = $900,000
Mathematically speaking, the 10% drop in price should be based on the inflated price at the of 2018; that is $1,012,600 - $1,012,600 x 10% = $911,340
So, what is the real drop in property price?
Let me show you how to calculate this:
($1,012,600 - $900,000) / $1,012,600 x 100% = 11.12%
Reported price drop does not refer to a specific property, but a sample of properties. If the sample consists of 1,001 properties of varying prices, and these prices are arranged in an ascending order, the price of the property listed the mid-point or 501st property in the list is known as the median price.
If the median price is $1,012,600, then 500 properties are sold for less than $1,012,600 and 500 properties more than $1,012,600. What median price does not tell are the lowest and highest prices. For all you know, the lowest price can be 20% less than the median price, and the highest 20% more. 20% is just an arbitrary percentage used for illustration only.
As you can see, median price is not the same as average price. Both median and average prices are used as a guide, and each property should be judged on its merit.
It is important not to be a smart Alec to tell the owners the property or their house is overpriced. To them, their home may be their castle. If you are interested in the property and want to negotiate, DO NOT upset the owner. Use a professional or real estate expert to negotiate on your behalf.
If you think the price is non-negotiable and not worth the price, walk away! One day, you may be in the same position, not prepared to negotiate with buyers who show interest in your property for sale in the market.
Thank you for reading.
