Earlier this year, Consumer Affairs Victoria (CAV) announced it would be heavily scrutinising the hot auction market in the lead-up to Easter.
However, the positive results from the crackdown in Australia’s auction capital have been a welcome respite for the industry as Queensland introduces new laws to stop the practice of underquoting.
With some agents fearing the changes may spread to other states, the results of CAV's crackdown should be an encouraging indicator.
However, in the latest Real Estate Business straw poll, it appears the industry believes things are much worse than they are.
Of the 368 respondents, 47.6 per cent said underquoting was a major problem in the industry, while 17.9 per cent said it was an issue but wasn’t too bad.
A total of 19.6 per cent said it was not a problem, but admitted it happens, while just 10.6 per cent of agents believe there is no active underquoting in the industry.
The thorough investigation included screening the advertising of all property auctions where a price was indicated during the peak period in April, according to CAV.
“Advertised prices were compared with independent market data, to identify prices that appeared significantly out of step with the market. Agents were then contacted and asked for evidence to justify their advertised price.
“Our monitoring of these properties continued through to sale,” CAV said in a report on the crackdown.
“CAV also attended a number of auctions to ensure they were conducted according to auction rules.
“While agents' compliance with auction rules is close to 100 per cent, any non-compliance poses significant risks for buyers and sellers. It is for this reason CAV monitors auctions and assists agents to comply.”
Speaking with Real Estate Business, director and managing partner of Jellis Craig Balwyn, Steven Abbott, believes the results are an excellent reflection of the Melbourne market.
“If it was anything less I would have been disappointed,” said Mr Abbott, whose office runs 800 on-site auctions each year.
“We’re one of the most highly scrutinised industries, and the professionalism of the industry over the past 20 years has lifted in that time fame.
“Buyers, vendors and agents all have access to similar, if not the same, data to determine house price. This is an informed marketplace where the mystery has been removed from pricing which makes it pretty easy for consumers to work out if the quoted price is on the money or not.”