One prominent property expert has backed proposed new laws to end underquoting, criticising Victoria’s peak real estate body for opposing them.
SQM Research managing director Louis Christopher said Victoria's Liberal-Coalition government has made a sound decision in promising to introduce harsher laws on underquoting if re-elected on November 29.
“I’ve always had a strong belief that a transparent market is a healthy market – it breeds confidence,” he told Real Estate Business.
Mr Christopher said that while it's impossible to know for certain how widespread the practice is in Melbourne, anecdotal evidence suggests it has not improved, despite the laws already in place.
“I don’t know if it’s been getting worse, but I don’t think it’s getting better,” he said. “Certainly, of late there has been a lot more discussion about it, and with the recovery in the market there’s no doubt there are a lot of disappointed buyers.”
The Real Estate Institute of Victoria this week called the proposed new laws "unnecessary", saying the state has had laws against underquoting since 2006.
However, Mr Christopher urged the Coalition not to be “scared off by the protests of the Real Estate Institute of Victoria” and should push ahead, given the existing laws are ineffective and unclear.
“I think the laws need to be clarified. What the Liberal-Coalition is putting forward is additional clarification, making clear what needs to be done. Perhaps the existing laws are not being made clear enough,” he said.
Mr Christopher told Real Estate Business that one way to improve the system would be to oblige vendors to publish price ranges by which they would then be bound.
“If we had a range, that would give the vendor some scope, but would be enough to give the buyer a guide and prevent the strategy of deliberate underquoting,” he said, adding that it's hard for government monitors at auctions to know whether inflated prices are the result of underquoting or market forces.
He said one simple – albeit time-consuming – solution would be for the regulators to collect price data from before and after auctions.