Average price
An average price usually means the mean: all the sale prices added up and divided by the number of sales. Expensive sales pull it upwards.
In everyday use, the average price means the mean: add up every sale price and divide by the number of sales. Many published house price figures are averages of this kind.
The term is also used more loosely. Some reports call a median an average, and the House Price Index publishes an average price worked out in a different way. It helps to know which one you are reading.
How the mean works
The mean gives every sale equal weight in the total. That makes it sensitive to a few very high prices. In most areas a small number of large homes sell for much more than the rest, so the mean usually sits above the median price.
As an example, if four homes sell for £250,000 each and one sells for £1,250,000, the mean is £450,000 but the median is £250,000. Four of the five buyers paid far less than the mean. The figures are only for illustration.
When the mean is useful
The mean is the right figure when you want a total divided by a count, for example the total value of sales in an area spread across the number of sales. Across a large area with many thousands of sales, a few unusual ones also matter less.
If a report gives both a mean and a median, a mean well above the median usually means some expensive sales are pulling it up.
The average price in the House Price Index
The UK House Price Index publishes an average price for each area it covers. It is not a simple mean of that month's sales. It is a geometric mean of prices from a statistical model that adjusts for the kind of homes sold, so it gives less weight to very expensive sales and does not jump when the mix of sales changes. That is what mix-adjusted means.
So the index's average price for a local authority and a median for one postcode district are different measures. They will rarely match, and neither is wrong.
Which to use
For a small area such as a street or postcode district, the median is usually the better guide to a typical home. For a whole country or region, the index is the standard measure. Our guide to average and median house prices covers both in detail.
| Usual meaning | Mean (total divided by number of sales) |
| Pulled up by | A few very expensive sales |
| Compared with the median | Usually higher |
| House Price Index average | Geometric mean, mix-adjusted |
Related terms
Median price · House Price Index · Mix-adjusted · Price Paid Data