How much are the properties worth in your suburb? If you are thinking of selling, how much will your place sell for? There are two major metrics that property professionals look at to answer this question; which one should you focus on?

Understanding the difference between median sales price and median value can provide you with useful insights into exactly what is going on in your local market.

The traditional metric is median sales price. This is the median - or middle - price of all the properties that have sold within the suburb over a period. Typically, a median sales price is measured over at least 12 months, with at least 10 sales to determine a median sales price (the more sales the better). 

In any given suburb across Australia, an average of only 7% of properties are usually for sale at any given time. Median sales price, is therefore by its definition, the middle price of what is selling. 

Furthermore, the percentage change in median sales price measures the difference in what is selling now, compared to what was selling for the previous period, which can make median sales price changes appear more volatile. For instance, in a suburb where housing stock is majority comprised of three-bedroom homes, a new development of two-bedroom home sales may skew the median sales price lower.

Alternatively, a cluster of homes may have been renovated up to four bedrooms and now boast more luxury fittings and features, which may skew the median sales price higher.

The second metric is median value, which is a much more stable metric, because of the amount of data used to determine the figure. It is based on a calculation for every property across a suburb or geography, not just those that are sold. This means thousands of properties and close to 100% of the housing stock are used to determine the figure. 

At CoreLogic, our valuation systems calculate the value of every property across Australia every day. Because our systems power the majority of the banking and valuation industries, who require data with extraordinary accuracy, the median value is the middle value of every individual property within the suburb at a given time. 

While median values may not show as dramatic growth or change as median sales price, they are largely regarded as being a more definitive figure of how a bank would value a property.

If the median value is higher or lower than the median sales price, this could be because your property is different to the types of properties currently selling (which you can check by looking at recent sales online and identifying property features) or it could be due to buyer demand. 

If both the median value and median sales price is significantly lower than what you'd like to get for your home, maybe rethink selling, as it's an indication that your price expectations are out of alignment with the market.

Remember, the only truth is on auction or sales day - as your home is only ever worth what someone is prepared to pay for it.