As states attempt to tackle underquoting, new data reveals fewer than 4% of real estate agents are listing homes within 3% of the final sale price, with properties selling for hundreds of thousands of dollars above the price guide in several parts of the country.
Analysis looking at all published price guides for residential sales in the six months to April, compiled by home buying app HOMER, has revealed that across all capital cities, the typical above-guide sale overshoots by 4-9%, while the typical below-guide sale undershoots by only 3-5%.
Perth and Adelaide lead the country, with 76% and 73% of capital city sales respectively exceeding the guide ceiling. The typical above-guide Perth home sells for $56k more than advertised; in Adelaide, it’s $75k.
But Sydney has the biggest dollar gap in the country. When a Sydney property sells above the guide, it sells for a median $117,500 above the top of the advertised range. Brisbane is close behind at $100,000.
Melbourne is the national outlier. It’s the only capital where more properties sell below the guide (53%) than above (37%). Regional Victoria is even more pronounced at 71% below the guide.
CEO of HOMER, Henry Pedersen, said the industry still has a widespread problem with transparency.
“Ultimately, it leads to buyers engaging with homes they were never realistically in the market for, right?” he said.
“It causes an enormous amount of wasted time, money, and emotional investment, and like stress within relationships, all that kind of stuff that goes on because you’re kind of chasing things that you can’t afford.”
Analysis done by Guardian Australia in 2024 revealed underquoting – defined as any sale where the final sale price exceeds 10% of the highest presale price guide – was more prevalent in Sydney (20% of sales) and Perth (18% of sales), and least prevalent in Canberra, Hobart and Darwin.
There are laws against deliberate underquoting in New South Wales and Victoria, but just because a house sells for more than its price guide does not mean that the selling agent has broken the law.
While some jurisdictions were trying to curb it, Pederson said it was “mind-boggling” that the reserve could sit outside the price guide.
“There’s so much confusion in the market,” he said.
“There are so many different signals buyers are getting. It’s really hard for you to know who you can trust and who you can rely on and what data points are fair and transparent and which ones are just trying to drive inquiry to a property and then sell it 10%, 15%, 20% above that.”
The managing director of the Australian Housing and Urban Research Institute, Michael Fotheringham, also said the “greater concern” was when the auction reached a price within the advertised guide, but was then passed in.
“That’s where the estimate is, in fact, deceptive,” Fotheringham said. “So, you know, there’s a twofold question here: are the estimates accurate? Typically, no, they’re a bit low. But if the auction does land in that zone, is the property actually for sale?”
Last year, the Victorian government introduced new guidelines aimed to ensure agents use the most appropriate comparable local properties when determining a home’s likely price before auction, factoring in things like the dwelling’s age and any renovations. Consumer Affairs Victoria can ask for evidence from agents showing how they chose the three most comparable properties, and penalties apply for not providing these records.
In NSW, there are new laws forcing property sellers to publish a price guide on all advertising, and agents caught underquoting can now be fined $110,000 – five times the previous penalty or three times their commission, whichever is greater.
But because auctions can be unpredictable, underquoting can be very hard to prove, Fotheringham said.
“It’s easy for an agent to say, oh, well, we got a better crowd than we expected and they were more enthused than we were expecting them to be,” he said.
“But if they’re consistently underestimating, it’s suggesting that those rules aren’t having the effect they need to.”
Fotheringham said it was a continuing challenge that was hard to address – but the growing number of auctions showed a growing shift around housing.
“I think the fact that we’re doing more auctions these days than private sales is part of the challenge,” he said.
“It’s part of the broader shift in our thinking about what housing is for. It’s the financialisation of housing. It’s another sign that housing is there to shelter and grow our money more than it’s there to shelter and grow our families.”
