The Real Estate Institute of Victoria (REIV) is interested in assessing the increase in the house prices in Melbourne and the impact of these prices on the buyers who are interested to buy any properties. A recent analysis showed that the median house price is over $1 million in the suburbs of Melbourne. Thus, the main aim of the Real Estate Institute of Victoria (REIV) is to evaluate whether the city of Kingfisher Bay and its suburbs have affordable house prices. Some recent media articles showed that there was not enough availability of rental properties across Melbourne. This has increased the house and the rental prices in the nearby suburbs of Kingfisher Bay.
A sample of 200 households of Kingfisher Bay was selected and their prices were recorded. The house prices of Kingfisher Bay vary between $192,000 and $1,761,000 with an average of $886.575. About 50 percent of the houses are priced below $852,000. Most of the prices of the houses are close to the mean price and less than the mean price. There are no houses in Kingfisher Bay, the prices of which are a lot higher or lower compared to the others. Thus, there are no outlier house prices in Kingfisher Bay.
It can be seen that the media articles focus on the median house prices and not the mean house prices. The median is always a better measure in this case than the mean. The highest and the lowest house prices among all the houses in Kingfisher Bay are not available. Thus, the mean will not give an appropriate estimate of the house prices. The median on the other hand is not affected by the highest or the lowest value. Thus, this is more appropriate to give the average value. Again, the median is not affected with any extreme values but the mean gets affected with extreme values. Thus, the median is a much more appropriate and reliable measure than the mean to reflect the average value.
From the sample it has been estimated that the average price of houses in Kingfisher Bay is $886,575. From this estimation, it can be said with 95 percent confidence that the average house prices in Kingfisher Bay will lie between $828,446 and $944,714.
From the sample, it has been estimated that the percentage of houses in Kingfisher Bay which are priced above $1 million are 35.83%. From this proportion it can be said with 95 percent confidence that the proportion of all the houses priced above $1 million lies between 27 percent and 36 percent.
From the sample of 120 houses, it has been observed that 35 percent of the houses are in good condition and 19 percent of the houses are in very good condition. Thus, in totality, 54 percent of the houses are in good condition and 46 percent of the houses are in poor and very poor condition. Thus, most of the houses are in good condition in the suburbs of Kingfisher Bay.
It has been observed from the analysis that there are significant differences in the average house prices according to the conditions of the houses. It can be said that the house prices are higher for the houses in good condition and lower in houses where the condition is not good. Again, the house prices differ in different suburbs. It has been observed as a result of the analysis that the average house prices are highest in Suburb C and lowest in Suburb A. On the other hand, no significant differences have been found on the condition of the houses across the different suburbs. There are almost an equal proportion of houses of each condition in each of the there different suburbs.
From the analysis so far, it can be said that the both condition and suburb has an impact on the house prices. The house prices are high in Suburb C despite of the condition of the houses. The conditions are almost the same in the all the suburbs still; the prices are high in Suburb C. Thus, it can be said that the impact of Suburb is bigger than that of the condition of the houses on the house Prices.
A wide variety of people have a belief that the house prices are high where the rental investments are good. There is very strong basis to support this claim as from the analysis of this data it has been observed that the price of the houses increases with the increase in house rent. Thus, it can be said that when the price of the house rent increases, owners have a much better income. Thus, they will not be interested in selling the houses anymore as the earning from the rents will be constant and will be coming as a recurring amount every week. This will be of much profit than the selling the house. Hence, the home owners increase the house prices so that the buyers will not go for buying the houses at such a high price.
The house prices are determined on the basis of certain indicators. The key indicators are discussed as follows:
The factors that have been discussed above are expected to influence the house prices. But the factors that have been identified as influencing the house prices from the analysis are Lot sizes of the houses, age of the houses, area occupied by the houses, the street appeal of the houses and the number of storeys in the houses or the storey in which the apartment is. From the analysis, these factors have been identified as the most significant factors to affect the house prices in Kingfisher Bay.
There have been some claims from some real estate representatives. They stated that the weekly rent of Kingfisher Bay is greater than $600 and thus it has made Melbourne Metropolitan and its surrounding suburbs an unaffordable area to live in. According to the tests and analysis run on the data provided, it has been found out that the claim is not true. Enough evidence has been found out to reject the claim that the average of the house prices is higher than $600 for each of the three suburbs.
Another claim made by the real estate representatives is that there were lack of development in the Kingfisher Bay and more than 75% of the houses in Kingfisher Bay are older than 10 years. From the analysis it has been found out that the claim is true. Thus there really is a lack of development in the Kingfisher Bay area that makes 75% or more of the houses at least 10 years old.
For further surveys, in order to estimate the average house prices within $50,000, the sample size that will be required for the survey is around 385 and to estimate the proportion of house prices to be within 3%, the sample size that will be required for the survey will be 45.
Conclusion:
After discussing the recent analysis on the median house price in the suburbs of Melbourne, a conclusion can be drawn. The chief aim of this report was to evaluate whether the city of Kingfisher Bay and its suburbs have affordable house prices or not. However, some media articles only have focused on the median house prices and not the mean house prices. Moreover, the mean price will not provide an appropriate estimate of these house prices. After analyzing complete statistical data of households, it can be seen that there are significant differences in the average house prices across the city. It can also be observed that the house prices with good condition situations are higher compared to those houses with poor housing conditions.
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