Victorian Government Pushes for Greater Real Estate Transparency Amid Underquoting Concerns
The Victorian government is advancing legislation to increase transparency in the real estate market, notably by mandating the public disclosure of residential property sale prices. These proposed reforms are a direct response to investigations into underquoting practices. Concurrently, the Real Estate Institute of Victoria (REIV) has offered alternative proposals, while New South Wales has already introduced its own stricter laws to combat underquoting.
Victorian Government's Transparency Initiatives
The Victorian government plans to introduce legislation that would prohibit real estate agents and homeowners from withholding property sale prices. This initiative directly aims to expose underquoting and enhance the accuracy of price guides for properties sold statewide.
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Sale Price Disclosure:
Currently, many recently sold properties have their prices listed as "withheld" or "contact agent." Consumer Affairs Minister Nick Staikos stated that the new laws would provide a clearer market view, reduce wasted time for buyers, and mitigate market distortion caused by undisclosed prices."The new laws would provide a clearer market view, reduce wasted time for buyers, and mitigate market distortion caused by undisclosed prices."
The legislation is expected to be introduced to parliament in June 2026, with implementation targeted for 2027. The government plans to collaborate with the industry on final policy specifics, including disclosure timeframes. -
Building and Pest Inspections:
Premier Jacinta Allan has pledged to mandate free building and pest reports for prospective buyers if the current government is re-elected. Consultations are planned to determine report content, conflict of interest safeguards, costs, and inspector accreditation. Opposition Leader Jess Wilson has commented on the plan's lack of detail and questioned the timeline. -
Initial Auction Law Proposal:
The government previously stated its intention to introduce laws requiring real estate agents to publish the owner's exact reserve price at least seven days before an auction or fixed-date sale.
REIV Counter-Proposals and Industry Concerns
The Real Estate Institute of Victoria (REIV), representing over 5000 real estate professionals, initially showed some support for reserve price disclosure. However, the REIV has since formally opposed the government's plan for exact reserve price disclosure seven days in advance, citing significant practical concerns.
The REIV argues that mandating exact reserve price disclosure seven days in advance could lead vendors to set cautiously higher reserves, potentially inflating prices and constraining sellers on auction day.
The REIV has instead presented an alternative blueprint of reforms, which includes:
- Reserve Price Confirmation: Vendors would confirm their reserve price is within the advertised 10 percent price range at least three days before an auction, rather than disclosing an exact figure.
- Private Sale Pricing: For private sales, properties would be advertised at a single "owner's asking price," representing the vendor's desired sale price.
- Demerit Point System: Introduction of a demerit point system for real estate agents, potentially leading to license suspensions or bans for repeat offenders or serious infractions.
- Free Building Inspections: Providing prospective buyers with free building and pest inspection reports, with the cost to be absorbed by the successful buyer. This aims to reduce expenses for buyers who often pay for multiple reports.
- Sale Price Disclosure: Requiring the disclosure of sale prices for all residential properties once a contract becomes unconditional. The REIV noted that current methods for accessing prices via Valuer-General Victoria can take six months or more, diminishing the information's value.
Underquoting: The Catalyst for Reform
These proposed reforms in Victoria stem from the findings of the "Bidding Blind" investigation. This investigation revealed that more than half of 26,000 Melbourne properties auctioned sold above their advertised price range, highlighting significant concerns with existing underquoting regulations. Consumer groups have strongly supported timely sale price disclosure, emphasizing its crucial role in fostering transparency in the home-buying process.
New South Wales Takes Stricter Stance on Underquoting
The New South Wales (NSW) government is implementing new legislation to enhance the regulation of its real estate sector. These draft laws specifically aim to address misleading price estimates, commonly known as underquoting, and other deceptive practices by real estate agents.
- Key Legislative Changes in NSW:
- Increased Fines: Penalties for agents found underquoting will increase to $110,000, or three times their commission, whichever is greater.
- Dummy Bidding: The practice of "dummy bidding" will also incur a $110,000 fine.
- Mandatory Price Guides: Sellers will be required to publish a price guide on all property advertising.
- Statement of Information: Agents must provide a "statement of information" to buyers, detailing comparable sales and average prices to justify the listed price.
- Prohibition on Lower Advertising Prices: Agents will be prevented from advertising a property at a price lower than a previously rejected offer.
NSW Fair Trading Minister Anoulack Chanthivong stated that these measures are intended to protect homebuyers and enable NSW Fair Trading to enforce regulations more effectively.
This move by NSW aligns with a broader trend towards stricter real estate regulation across Australia.