Tracking House Prices

A most excellent article in Sydney Morning Herald's BusinessDay explains why it is so difficult to determine trends in house prices. This blog has commented before on the danger of quoting median house sale prices, which are influenced by the nature of purchasers and the increasing size of new houses. The article reminds us how "the flood of first-home buyer properties onto the market last year would have produced a price fall on a simple median reading due to the lower average value of those properties". So as higher-value properties return to their natural proportion of the market there is bound to be an apparent but entirely artificial increase in median house values.
RP Data-Rismak seeks to distinguish homes by their attributes, comparing the trend of prices for four bedroom houses with pools and so on. Obviously this is a far more valid approach, but is greatly hindered by the paucity of sales of similar houses.
Even when the same property is sold twice in a short period the difference in price might be because house prices have gone up, but could be because the new owners did substantial renovations. Not surprisingly, the article's main conclusion is that "house price information is pretty poor".