Revealed: where property underquoting is rife in Australia – and when buyers are most likely to get stung

Builder Louie bought a house in Sydney’s inner west at auction. He expected the price to jump, but not as high as it did. Photograph: Mike Bowers/The Guardian

On a gloomy Saturday morning in Sydney, a small crowd with umbrellas and raincoats is waiting outside a terrace in the inner west for an auction to start.

The place is completely rundown, with peeling paint and water-stained ceilings. But the guide price online is $1.3m, and the house will sell for more than $1.8m after a six-minute auction marked more by a feeling of inevitability than excitement.