New Analysis Shows Well Over 50% of Properties Sell for Less Than the Average Price
Just a small number of high prices properties will skew the average price in any area. This means the average price is over 40% higher than the 'middle' price in some postcodes.
Using Average Prices Make House Prices Look Higher Than Most People Experience
Because of the way average prices are calculated they tend to make prices look higher than they are. More than half of properties are sold at less than this average
Chart 1 - Average vs Median Prices in the Nation Regions
Average Price Calculation
The average price is calculated by adding together the price of all the properties sold and dividing by the total number of properties.
- Very low price sales - At the lowest end, properties could sell for as littlee as £1,000 or maybe even £1
- Very high price sales - At the higher end they could sell at two, three, four or more times the average sale price
- High sales have more affect - A property sale at four times the average increases the it more than a sale at £1,000 reduces it.
So even a small number of high value sales will increase the average even though most people will experience a lower sale price.
Median Price Calculation
The median price is calculated by putting all the sale prices in order from lowest price to highest price and then picking the sale price that is half way from the top and bottom. Using this 'mid price' means that:
- 50% of sales are at a higher price
- 50% of sales are at a lower price
Adding some very high price sales to the list will just move the mid price up a few on the list. This will not usually increase the median by much no matter how high the prices are of the additional sales.
National Regions - Average Price Overstates by up to 25%
Across the National Regions the average price is higher than the median (mid) price
London is the most affected with average sale price being 25% higher than the mid price.
This is not surprising when there are properties in London selling for tens of millions of pounds. As a result, even though the average sale price is £620,000 most people have paid much less than that with the mid price being £467,000. This is a good £153,000 lower.
In the rest of the national regions the average is at least 13% higher than the mid price
Table 1 - Average vs Median Prices in the National Regions
|National Region||Median (Mid) Price||Average Price||Difference|
|Yorkshire and The Humber||£160,000||£191,688||-17%|
|East of England||£285,000||£333,084||-14%|
Explore the Source Data: Average House Prices - National Regions »
Postcode Areas - All but 87 Postcode Areas Overstate Average Price
Almost all the postcode areas in England and Wales have an average price higher than the mid price.
- 2,155 postcode areas have average price higher than mid price
- 87 postcode areas have average Price equal to or lower than mid price
Postcodes with the highest overstating of prices include many areas outside of London:
- GU25 - Surrey - 46%
- BH13 - Bournemouth - 42%
- TQ8 - South Devon - 34%
- B15 - Birmingham - 32%
- LL42 - West Wales - 32%
- BB9 - Lancashire - 32%
- LL20 - Lake District - 32%
- DL4 - Darlington - 30%
- TR2 - Cornwall - 30%
Table 2 - Average vs Median Prices by Postcode (Top 20 Postcodes)
|Postcodes||Number Sold||Median (Mid) Price||Average Price||Difference|
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