Industry groups warn mandatory price disclosure could reduce properties sold under the hammer
Victoria's state government has introduced legislation requiring vendors to publish their exact reserve price at least seven days before an auction, in a move aimed at eliminating underquoting.
The laws, tabled in parliament on Wednesday, would also compel public disclosure of sold prices. The reforms are scheduled to take effect from 1 October.
Underquoting — the illegal practice of advertising a property below the vendor's known reserve — is the primary target of the legislation. Renters Minister Paul Edbrooke said the laws were designed to stamp out the practice and improve pricing transparency for buyers.
However, the changes have drawn criticism from industry figures, who argue the mandatory lock-in period could restrict market flexibility.
"I'm not for a minute suggesting that underquoting is all right, because it's not," said Cate Bakos (pictured right), chair of the Property Investment Professionals of Australia.
"Forcing a vendor to lock in a decision (on price) seven days prior is a very long time. You're really taking away a lot of an agent's and a vendor's ability to pivot when they need."
The Real Estate Institute of Victoria (REIV) said it was "flabbergasted" that the government had proceeded with the changes despite what it described as "commonsense and evidence-based expert warnings".
The REIV had proposed an alternative model under which a price guide within 10% of the reserve be published three business days before auction.
"While the government's effort to address underquoting and improve the transparency of property transactions are well intended, its decision to move ahead with these laws will result in a real estate market with less transparency," said Toby Balazs (pictured right), chief executive of the Real Estate Institute of Victoria. "It will lead to fewer auctions in Victoria and more buyers in situations where they’re unable to see who they are competing against.
“It beggars belief that, despite a mountain of evidence and warnings of the unintended consequences, the government has gone ahead with this illogical and quite frankly reckless mandate.
“Listening to experience, expertise and data must be integral to legislative reform.”
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