Average not R1.2 million

Absa's decision this week to reformulate its definition of "middle market " homes and lift its upper price parameter for properties in this category to R2,2-million - and the miscalculations that followed - have caused a storm in the real estate market.

It is the median house price of this category - that is the price halfway between R193 000 and R2,2 million. "It is certainly not the average price," says Absa senior economist Jaques du Toit, who compiles the House Price Index. "The average price in each price category we use is of course weighted by the number of transactions in that category, which will give you a very different result."

For example, R550 000 would the median price of all homes priced between R100 000 and R1-million - but it would not necessarily be the average. The average is determined by adding together all the prices of all the homes sold in this category and dividing by the number of homes sold. For instance the nominal average house price for September this year was actually R605 226, or roughly half the R1,2 million.

As Benjamin Disraeli is attributed to have said: "There are three kinds of lie: lies, damn lies and statistics".

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