What Does Median Price Really Mean in Real Estate?

The median price is the middle value of all sales in a given area during a set time period. Imagine lining up every property sale from cheapest to most expensive—the median is the one right in the middle. This makes it different from the average price, which is calculated by adding all sales together and dividing by the number of sales.

In real estate, the average price can easily be skewed by one or two very high-value or very low-value sales. The median price smooths this out, giving a better reflection of what a “typical” buyer might pay. For example, if most homes in Kilmore sell around $600,000 but one acreage sells for $2 million, the average would jump dramatically and paint an unrealistic picture of the market.

For buyers and sellers, the median price is a useful benchmark for affordability. It helps first-home buyers see if they’re in range of the market and gives sellers an idea of where their property might sit compared to others. It’s also used by banks, agents, and analysts to measure growth over time and compare suburbs or regions.

While useful, median price has its limitations. It doesn’t account for the mix of properties sold in a period. For example if we are talking simply median price for a particular area, if more apartments than houses sell in a given quarter, the median might fall even though house prices themselves haven’t dropped – this is why median price data is usually split between houses and units. Likewise, in smaller towns where fewer homes sell, the median can swing wildly from one quarter to the next.

Median price is a handy tool to understand the market, but it’s not the full story. It should always be read alongside other indicators—like number of sales, days on market, rental yields, and buyer activity—to get a true picture of what’s happening in real estate.