New analysis has revealed that underquoting remains a significant issue in Australia's property market, with fewer than 4% of real estate agents listing homes within 3% of the final sale price. In several parts of the country, properties are selling for hundreds of thousands of dollars above the advertised price guide.
National Trends in Price Guides
The data, compiled by home buying app HOMER, examined all published price guides for residential sales in the six months leading up to April. Across all capital cities, the typical above-guide sale exceeds the advertised range by 4-9%, while below-guide sales undershoot by only 3-5%.
Perth and Adelaide lead the country in above-guide sales, with 76% and 73% of capital city sales respectively exceeding the guide ceiling. In Perth, the typical above-guide home sells for $56,000 more than advertised, while in Adelaide, the figure is $75,000.
Sydney and Brisbane: The Biggest Dollar Gaps
Sydney has the largest dollar gap in the nation. When a property in Sydney sells above the guide, it typically goes for a median of $117,500 above the top of the advertised range. Brisbane is close behind, with a $100,000 premium on above-guide sales.
Melbourne stands out as the only capital where more properties sell below the guide (53%) than above (37%). Regional Victoria shows an even more pronounced trend, with 71% of sales falling below the guide.
Industry Transparency Concerns
Henry Pedersen, CEO of HOMER, stated that the industry still has a widespread problem with transparency. He explained that this leads to buyers engaging with homes they were never realistically in the market for, resulting in wasted time, money, and emotional investment.
A previous analysis by Guardian Australia in 2024 found that underquoting—defined as any sale where the final price exceeds 10% of the highest presale guide—was most prevalent in Sydney (20% of sales) and Perth (18% of sales), and least common in Canberra, Hobart, and Darwin.
Legal Framework and Enforcement
While New South Wales and Victoria have laws against deliberate underquoting, a house selling for more than its price guide does not automatically mean the agent broke the law. Pedersen described it as "mind-boggling" that the reserve price can sit outside the price guide, causing confusion among buyers.
Michael Fotheringham, managing director of the Australian Housing and Urban Research Institute, highlighted a greater concern: when an auction reaches a price within the advertised guide but is passed in. He noted that this deceptive practice undermines trust in the market.
Recent Regulatory Changes
In 2023, the Victorian government introduced new guidelines requiring agents to use the most appropriate comparable local properties when determining a home's likely price before auction. Consumer Affairs Victoria can request evidence from agents showing how they chose the three most comparable properties, with penalties for non-compliance.
New South Wales has implemented laws forcing sellers to publish a price guide on all advertising. Agents caught underquoting can now face fines of $110,000—five times the previous penalty or three times their commission, whichever is greater.
Challenges in Proving Underquoting
Despite these measures, underquoting can be difficult to prove due to the unpredictable nature of auctions. Fotheringham noted that agents can easily attribute higher prices to unexpectedly strong buyer interest. However, consistent underestimation suggests that the rules are not having the desired effect.
Fotheringham also pointed to the growing number of auctions as part of the challenge, reflecting a broader shift in the perception of housing from a place to live to a financial asset.
