Average vs median house price
House price figures are often described as "the average price", but that can mean different things. The two most common are the mean, which most people call the average, and the median, which is the middle price.
For house prices the difference matters. A handful of very expensive sales can pull the mean up a long way, while the median stays close to what a typical home sold for. This guide explains both, with a worked example, and shows how the UK House Price Index takes a third approach.
What each one means
The mean is found by adding up every sale price and dividing by the number of sales. Every sale counts, so one very large or very small price moves the result.
The median is found by putting every sale price in order from lowest to highest and taking the one in the middle. If there is an even number of sales, it is halfway between the two middle prices. Half the sales were at or below the median and half at or above it.
A worked example
This example uses made-up round numbers to show the method. Imagine a street where five homes sold in a year for £250,000, £270,000, £280,000, £300,000 and £1,200,000. The last one is a large detached house at the end of the road.
The mean is the total, £2,300,000, divided by five, which is £460,000. Four of the five homes sold for well under that figure, so it does not describe a typical sale on the street.
The median is the middle price of the five, which is £280,000. That is much closer to what most homes on the street sold for.
Now imagine the large house had not sold that year. The mean of the other four drops to £275,000, a fall of £185,000, even though nothing changed for the typical home. The median moves from £280,000 to £275,000. That is why a mean can swing sharply from month to month in a small area.
Why House Price Monitor uses medians
House Price Monitor reports medians for every postcode district and street. A few very expensive or very cheap sales cannot pull a median off course, so it gives a steadier picture of a typical sale.
This matters most for small areas. A postcode district or a single street may only have a handful of sales in a month, and one unusual sale would distort a mean. The median holds up better.
The figures count every house and flat sale in the Land Registry data, including buy-to-let, company purchases and repossessions. They leave out land, mixed-use and other non-residential sales, and transfers under £10,000. More detail is on the about page.
When the mean is still useful
The mean is not wrong. It is the right figure when you want the total value of sales divided by the number of sales, for example when estimating total spending on housing in an area.
Many published figures use a mean, so it helps to know which one you are looking at. If a report gives a mean and a median for the same area, a mean well above the median usually means a small number of expensive sales are pulling it up.
How the UK House Price Index differs
The UK House Price Index is the official measure of house prices. It is produced by HM Land Registry, the Office for National Statistics, Registers of Scotland and Land and Property Services Northern Ireland, and published every month.
It does not use a simple mean or median. It uses a statistical method called hedonic regression, which takes account of the kind of homes sold, such as property type, size and location. This is called mix-adjustment. It stops the figure moving just because more flats or more large houses happened to sell in a given month.
The index works out its average price as a geometric mean, which gives less weight to very expensive sales than an ordinary mean. Below regional level it uses a three-month moving average to smooth the figures.
So the UK House Price Index and a median of sales in one postcode district answer different questions. The index tracks how the price of a typical mix of homes changes over time across a wider area. A median tells you the middle price of the homes that actually sold in a particular place. Both are useful, but their figures will not match.
Reading figures for a small area
Whichever measure you use, check how many sales sit behind it. A median of three sales is far less reliable than a median of three hundred. Compare like with like too: a median that mixes flats and detached houses will move if the mix of sales changes. Comparing streets and postcodes covers this in more detail.
Prices for your postcode
The postcode district and street pages on House Price Monitor show median sold prices and are free to read. Start from the postcode list.
The full monthly report for a postcode district lists every sale behind the median and costs £4.99 a month, with the first report free on sign-up. See pricing.
Other guides
How to work out how much house prices have changed
Comparing house prices between streets and postcodes
What the Land Registry price data includes
How to find what a house sold for