Analysis of House Prices in Kingfisher Bay Area, Melbourne

Table of Contents
Executive Summary.....................................................................................................................................2
Body of the report.......................................................................................................................................3
Question 1 – Median prices is the average prices....................................................................................3
Question 2 - Significant differences of the house....................................................................................3
Question 3 - To measure the degree of association between the house prices and other key variables....4
Question 4 – Rent and age of the household............................................................................................5
Question 5 – Average prices and Vacancy rate........................................................................................6
Conclusion...................................................................................................................................................6
References...................................................................................................................................................6

Executive Summary
The main aspect of this report is to perform a detailed analysis on the information which is
collected by the manager of research wing of REIV, the information is related to the various
factors like price of the house, conditions, bay area etc of Kingfisher bay area in Melbourne,
Australia. The manager of real estate research institute is concerned in understanding the price
movements of the properties in the Kingfisher bay area, there was a conception that the property
located in the area is expensive or the rents are always high, the manager is interested to
understand the hypothesis. In this conjuncture the manager has assigned the research team to
collate sample details from the bay area, the team has collected details of nearly 120 properties
and the details are mainly attributed to the selling price of the houses, lot size which is measured
in square metres, number of storey or levels, proportion of bay view from the property, type of
suburban etc. These data are analysed using various statistical tools and models based on the
questions and hypothesis set by the manager of the research institute. The purpose of this report
will be dependent on the issues and the questions which is raised by the Director of the research
institute on the questions and concerned rose in the area. The research director is of the thought
that the Kingfisher area is considered as the exclusive area with high prices in the market and
also the rental prices is also high in these areas. But the council members and the residents of
that area feels tha such aspects are false and due to this the director has taken up a full fledged
analysis based on the data and there are serious of questions which are posted by the director.
Hannah Zhou is the director and post 5 important questions which will be the base of preparing
the research work, this is involved in stating the median price of the house, they are also
interested in understanding the significant differences among the 3 key variables like the prices
of the houses, conditions of the house and the type of suburban. The next research question is to
find the degree of association among the prices and other key factors which contribute for
increase in the prices. The director is also interested to know that the rental prices in the area is at
an average rate of $600, the vacant properties in the locality is around 3% of the total households
in the area. So, these questions are addressed and a detailed interpretation is given based on th
analysis made from the data .

Body of the report
Question 1 – Median prices is the average prices
The director posted the first question with confusion that the average prices of the properties
which is stated in the newspaper are related to the average (mean) values, but in the news paper
they have stated that the prices are of median. However, the mean values and the median values
are entirely different. The average price is considered by adding all the values in the data and
then dividing the sum by the total number, but the median value is considered as the middle
value of the entire data set after arranging them in the ascending order, this shows that half of the
values will be above the median value and another half will be below the median values, the
computation of these values will take into account all the values presented in the data collection.
(Witte, 2010).
The median value is stated as the total set of data which lies half of the values above them and
another half are lying below the median values, so it is usually considered as the best measure to
understand the average prices, specifically the real estate properties. Based on the computation
the average prices is computed as $886.58 (in ‘000) and the mode value is $811.00 (in ‘000),
the mode is commonly stated as the number which occurs ore often in the data set. However, the
median value of the data collected based on 120 properties is stated to be $852.00 (in ‘000).
Therefore, it can be concluded that the prices which is stated in the newspaper of median number
is the average price and it can be stated that the median price is considered as the best measure
while measuring the average prices for the proporty. Moreover, it is usually stated that the
median values is stated to be the easiest measure, could be understood and widely accepted
measure as it does not get affected by many outliers.
Question 2 - Significant differences of the house
The next key question posted by the director to the research analyst is to measure and check
whethere there is any significant differences among the variables like the conditions of the
household, type of suburban in the Kingfisher bay area and the selling prices of the household.
Furthermore, the director is interested to know the conditions of the household in the bay area, so