How House Prices Are Measured: Medians, HPIs and What Headlines Miss
In the same month you can read that house prices rose, that they fell, and that they were flat, all of it accurate. The reports are measuring different things, and none of them is measuring the thing most readers assume, which is what happened to the value of their own house.
There are four numbers in circulation and each answers a different question. Knowing which is which turns property reporting from noise into information, and it stops you drawing a conclusion about your own street from a number that was never about your street.
The three things to remember
The median is the middle sale price, so it moves when the mix of what sold changes. The House Price Index adjusts for that mix, so it is the better measure of value change. And your CV is a rating valuation, not a market appraisal.
If a quiet month happens to include several expensive sales, the median rises even if not one house in the country changed in value. This is the single biggest source of confusion in property reporting. The median tells you about what sold. It does not tell you about what is worth what.
Median against mean
The median is the middle value when you line every sale up in order. The mean is the total divided by the count. On a symmetrical spread they land close together. House prices are not symmetrical: there is a floor near zero and no ceiling, so a handful of very expensive sales drag the mean upwards.
Try it with your own figures in the mean, median and mode calculator, or the median calculator on its own. The gap between the two measures is itself a useful signal: the wider it is, the more skewed the sales were.
The mix problem
Even the median has a weakness, and it is a serious one. It describes the properties that sold, and what sells changes month to month.
The House Price Index
An index exists precisely to solve that. Rather than averaging whatever sold, an index tracks price changes for comparable properties, so it separates value change from mix change. The REINZ House Price Index is the main one used in New Zealand.
The practical consequence is a rule of thumb worth keeping. If you want to know what things are selling for, look at the median. If you want to know whether values are rising or falling, look at the index. Headlines quote the median because it is a dollar figure and reads well, which is exactly when the index is the more informative number.
Prices are slow to move and volumes are fast. When sales volumes fall and the median holds, the market is usually turning before the price data shows it, because sellers withdraw rather than accept less. Days to sell, and the ratio of sales to listings, often lead the price measures by months. A price number read on its own misses the earliest part of the story.
Your CV is not a valuation
The capital value on your rates notice, the CV or RV, exists to divide the council's rates bill among ratepayers. It is a mass appraisal done across a whole district at a single date, usually every three years, without anyone going inside your house.
| What a CV is | What it is not |
|---|---|
| A relative measure for allocating rates | A market appraisal of your property |
| Set at a fixed revaluation date, often well in the past | A current figure |
| Based on district-wide modelling | Based on an inspection of your renovations |
| Split into land value and improvements | A number a bank will lend against |
Two consequences follow. Sales "above CV" or "below CV" mostly reflect how stale the revaluation is rather than anything about the buyer's judgement. And a CV rising by more than the district average does not increase your rates by that amount; rates depend on your value relative to everyone else's, because the council is dividing a fixed bill.
Reading a property headline properly
What actually tells you about your own house
None of these measures answers the question people usually have. A national or regional statistic describes a market; your house has a specific location, condition, size and land area, and it will sell for what a buyer pays on the day.
For your own property, recent comparable sales of genuinely similar houses nearby are worth more than any index. Look at what sold, not what was listed, and adjust honestly for the differences. An appraisal from an agent is free and useful, provided you remember they are also pitching for the listing. A registered valuation costs money and carries weight with lenders in a way an appraisal does not.
REINZ publishes the median, the House Price Index and days to sell from actual agent sales. Stats NZ publishes methodology and wider housing statistics. Your council publishes rating valuations and their revaluation date. Each is authoritative for its own measure and none of them is measuring the others.
What this guide does not cover
Automated online estimates are not covered here; they are models built on the same public data with their own error ranges, which they usually publish and readers usually ignore. Rental yields, construction cost indices and land value indices are separate measures again. Objecting to a rating valuation follows a council process with its own deadlines. This is general information rather than valuation or investment advice.
Test Your Knowledge
Ten questions on what property numbers actually say.
Sources: REINZ for the median, House Price Index and days to sell, Stats NZ for housing statistics methodology, and your local council for rating valuations and revaluation dates. The worked example uses illustrative figures to show the effect of skew.
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