In the API magazine, there are a spread of statistical information on each suburb, it is broken down into the Median, Upper Quartile and Lower Quartile growth sections.
My question is why are these important to the property investor, is it simply to provide a spread of information or is there something specific it is used to represent?
D.
bump
Any ideas on these guys?
Hi D,
The use of quartile medians as per the API magazine is aimed at giving people who are stats driven some more information about the relativities of a property market.
I’ll use 100 sales (ranked in order from lowest to highest) as the sample to make the illustration a little more meaningful.
Primarily the median price is the middle price achieved of all property sales in the relevant area – that is the 50th ranked property in the sample above.
The lower quartile is the price achieved by the 25th ranked property in the sample above. Conversely the upper quartile median is the price achieved by the 75th property in the ranking order.
In a standard range of prices it is reasonable to expect that the gaps between the lower – mid – upper quartlies to be relatively the same in a normal market.
If there are discrepancies (ie lower quartlie is close in value to median) then you can determined whether or not the properties in the suburb are generally of lower value or not. You can get a trend in price movements in the sample suburb by comparing the lower – mid – upper quartile prices with previous quarters to determine where the movement in prices is (or has). Ie is it in the lower end of the market, the upper end or in the suburb in total.
Obviously this is a very quick explanation of the quartiles and I hope it has been of some use.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113Thanks Derek, that was well written and informative.
PK
Yeh, thanks for another helpful post Derek.
Mike
Always Ready.
No problems folks.
I might also add the use of quartiles is in some way an attempt to provide a little more detail behind the vagaries associated with only using median price as an indicator of property growth.
Median’s can be distorted through the quirks that exist in the property market.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113
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