Forget Median Prices! Discover the Real Way to Gauge Housing Affordability

If the median house price in your city fell last month, does that mean your home lost value? 

Probably not, because the median price measures the middle property sold during a particular period. It does not measure the change in value of every property, and that difference matters enormously in today’s market. 

In today’s episode of Demographics Decoded, Simon Kuestenmacher and I  explore why median price is not the best gauge for housing costs.”  

It’s a topic that couldn’t be more relevant in today’s complex and rapidly evolving housing market. 

That’s because in a market like this one, where plenty of vendors are choosing to sit tight rather than sell, the median can shift simply because a different mix of properties is changing hands, not because values themselves are moving. 

Lower priced properties keep transacting because life doesn’t wait for the perfect market. People still divorce, downsize, relocate for work or need to sell for financial reasons. 

But owners of higher value, investment grade properties are much more able to wait for stronger conditions before they list. Many are simply holding. 

So the mix of what’s selling skews cheaper, the median falls or flatlines, and everyone assumes prices are falling.  

By the end of this episode, you’ll understand exactly why the median price was never designed to answer the question everyone uses it to answer, what’s happened to the make-up of home buyers and sellers in Australia over the past three decades, and what smarter metrics you should actually be watching if you want to understand what’s really happening to property values. 

Simon also explores how Australia’s move from a bell-shaped to a U-shaped society has made the “middle” home less representative. 

We unpack why housing affordability depends on more than prices, including interest rates, deposits, incomes and the costs of owning and commuting. 

I share the market indicators investors can use alongside medians, from loan approvals and inspections to comparable sales, local demand and scarcity.

Takeaways  

• The median measures the middle sale, not every home’s value 
• Cheaper sales can pull medians down while comparable homes hold
• A U-shaped society makes the median home less representative
• Suburb medians can conceal sharply different local property markets
• Fewer middle-skill jobs have reshaped Australian household incomes
• Interest rates change mortgage repayments and practical buying power
• Deposits and serviceability affect access to housing finance
• Insurance and strata fees add to property ownership costs
• Commuting expenses make location part of housing affordability
• Loan approvals can signal buyer demand before completed sales

About Simon Kuestenmacher 

Simon Kuestenmacher is co-founder and Director – The Demographics Group. 

Simon is a prolific media commentator on demographic and data matters and a columnist for The New Daily and The Australian newspapers.    

He ranks as one of the world’s Top 10 influencers in data visualisation. If you can’t get enough of the kind of data that explains how the world works, make sure to follow Simon on LinkedIn or X (formerly Twitter) or any of his other social channels. 

Click here for a media enquiry or if you would like to book Simon Kuestenmacher for a speaking engagement. His presentations and quirky observations are enjoyed by audiences from the financial services, property, government, education, technology, retail and professional services industries, among others. 

About Michael Yardney 

 Michael Yardney – founder Metropole Property Strategists has been voted one of Australia’s 50 most influential Thought Leaders. 

While he is best known as a property expert, Michael is also Australia’s leading expert in the psychology of success and wealth creation. 

Michael is a #1 best selling author of 9 books and frequently challenges traditional finance advice with innovative ideas on property investment, personal finance and wealth creation. 

Follow Michael on LinkedIn or Instagram 

Are you interested in property investment – let the team at Metropole build you a Strategic Property Plan to help give you clarity, direction and wealth – producing results. 

Also, please subscribe to my other podcast, Property Investment & Wealth Creation Australia | The Michael Yardney Podcast. Just look for it wherever you are listening to this podcast and subscribe so each week we can unveil the trends shaping your future. Or click here.