Calculating REINZ statistics, Median or Average?

Why the median is right for house price trends.

There are technical reasons why the median provides a more accurate picture of what is happening to the prices of houses rather than the “average.” As an example, assume there are 11 houses sold in a month with a price range of $200,000 to $300,000 and an average price of $250,000. Now replace one of those houses with a house that sold for $1 million. The average is now $318,182, even though 10 of the 11 houses for the month sold for less than this value. The median would be the price of the middle house sold in the range (in this case the sixth house), which more accurately reflects what the majority of the houses sold for.

REINZ uses medians to provide a more accurate measure of the “mid-point” of house prices that reflects what most people are going to be buying and selling houses for. 

REINZ Enhanced Statistics Portal

The market intelligence reports will provide you with more ways to view REINZ data, it has the key reports generated by the old system, but also:

- Gives more flexibility in the presentation of data with different graphs and tables.

- Now matches government boundaries,as used in the recent REINZ press release. Boundaries can be viewed here.
(This means REINZ will no longer report on areas such as Canterbury/Westland and Waikato/Bay of Plenty, but each area will be addressed individually.)

- Can be used across devices, such as a tablet.

- Contains the REINZ House Price Index.

- Gives the ability to develop customised reports that can include your brand logo.

Definitions of Boundaries

Boundaries Description Example
New Zealand Ex-Auckland Due to demand from our members and because of our new boundaries, we have been able to create a NZ ex-Auckland calculation. This provides all REINZ report information for New Zealand, if we removed the Auckland Council from the calculations. -
Region Created in conjunction with the Reserve Bank, this is a combination of council boundaries joined together. Although not identical to Regional Councils they keep a similar boundary. Southland
Territorial Authority (council) The council boundaries of New Zealand, totaling 67 for both city and district councils. In the case of the Auckland Supercity, we also provide the historical council boundaries of North Shore City, Manukau  etc. South Taranaki District
Wards Often called electorates, council wards are smaller boundaries within larger demographic authority areas. Not all councils have wards, it is predominantly based on governance lines. Orakei Ward, Auckland
Suburbs New Zealand has no official suburb boundary, with different sources drawing different lines on a map. REINZ has standardised around the address file suburbs, which are based almost exclusively on the New Zealand Emergency Services suburbs. Avonhead, Christchurch

Why Seasonally Adjust the Data?

Seasonal Adjustment is very common with economic and financial statistics. The reason REINZ seasonally adjusts is to account for well known and persistent effects in the data that mask what is really going on. The purpose of seasonal adjustment is to remove these effects and allow analysis of what the underlying trends are.

For example, we know that there are fewer house sales in December and January, and there are more sales in November and March. This happens every year. There is always a lift in sales in November compared to October; by seasonally adjusting the data we can see whether the lift in sales was just part of the normal lift in sales we would expect or whether something more important is going on. For example, in November 2011 the number of sales increased by 20% compared to October 2011. But after adjusting for the seasonal effect (sales always lift in November) sales increased by only 4.3%.

Thus 15.7% of the increase was due to the normal lift in sales we would expect in November and 4.3% was the increase after taking into account this normal lift . The seasonally adjusted figure is an important indicator of the underlying market trends. The timing of Easter can also affect house sales, for example if Easter is in March then sales may be lower compared to a March when Easter is in April. If there was no seasonal adjustment we might conclude that sales fell in the March with Easter for other reasons, rather than recognizing that the holiday may have lowered sales.

Seasonal adjustment, as the name suggests, takes account of effects that happen on a regular annual cycle. It can’t adjust for one-off events such as the Canterbury earthquakes or the Rugby World Cup.

Stratified Median House Price Index

The Stratified Median House Price Index ceased production in March 2017. It has been replaced by the SPAR House Price Index. Click here to find out more about the SPAR HPI.

Need Your Own Statistics Report?

For bespoke statistics reports, please contact Sophie Ahern at sahern@reinz.co.nz or Ph: (021) 195 9977. Note that transaction level unconditional sales data is reserved for REINZ members only. Custom reports for the public contain aggregate level statistics (e.g. medians, counts). As a guide, a minimal custom report starts at $250 + GST and increase in price dependant on the complexity and volume of data requested.