Victoria’s nine years of underquoting laws and dedicated taskforce have been thrown into question after new findings showed property guides were largely not in line with final sale prices.
New data has shown that Victorian property guides have largely failed to match up with sale prices, particularly at auctions, throwing the state’s nine years of underquoting measures under the microscope.
According to new Homer data in a report from the Australian Property Institute, in the year to June, just 42.7 per cent of overall property sales in the state closed within the initial price guide.
The analysis of more than 100,000 property sales over the period found that, for auctions, 67.1 per cent of sales landed outside the advertised price range, while 52.1 per cent of private treaty sales fell outside.
The report found auction price guides were consistently set below eventual sale prices, while for private sales, properties were largely sold below their advertised guide.
Property Investment Professionals Association (PIPA) chair Cate Bakos told REB that the auction data was "particularly concerning”, as she suspected underquoting was a main driver of the results.
The findings came despite Consumer Affairs Victoria (CAV) introducing its first major underquoting laws in 2017, and rolling out a dedicated taskforce to tackle the matter in September 2022.
According to the report, since the taskforce became permanent in 2024, the share of Victorian homes selling within their price guide has only increased from 39.6 per cent to 42.1 per cent.
Bakos said underquoting was often used to attract more buyers by making a property appear cheaper than it was likely to sell for.
“Buyers gravitate to properties that they perceive could be bargain buys. Agents who have previously underquoted have attracted more buyers to their auctions,” Bakos said.
“Buyers often realise that the property they love has strong competition, and many rationalise their own budget increases in the face of social proof.”
She also said buyers’ inability to access final sale data, up until recently, had likely played a part in underquoting, but the recent mandated disclosure of sale prices was likely to help the matter.
“I see this as a positive, as buyers can do their own pricing analysis, rather than relying on Property Price Statements, which I also think are completely unreliable,” she said.
However, she said other aspects of the state’s new laws, such as disclosing reserve prices seven days before an auction, were unlikely to significantly help buyers.
“Consumer Affairs have been under-resourced and broadly ineffective, but the new changes are not helpful at all, and disadvantage buyers in my view,” she said.
“Vendors can change their mind anyway. Where does that leave buyers?”
Bakos also said that the change could make it easier for price guides to remain unchanged even when agents had received evidence that buyers are offering less.
“The previous legislation required a vendor to update their quote range if they received an offer below the range – the new legislation allows the vendor to leave it unchanged now,” she said.
A CAV spokesperson said that it was too soon to determine whether the underquoting laws were achieving their objective.
The body said that since the taskforce was established, it had conducted 3,330 sales campaigns, issued over 430 official written warnings, and dealt 260 infringement notices totalling more than $3 million.
“Taskforce investigations have also resulted in legal action by Consumer Affairs Victoria against more serious cases of underquoting,” it said.
“Penalties for underquoting have increased to a maximum of over $48,000 per breach for real estate agents and sellers caught breaking the law.”
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