SYDNEY – Mr Stuart Jones, a property agent in Sydney, attended an auction on Feb 12 for his client, who was hoping to buy a home in the inner-city suburb of Newtown.
The property had an advertised guide price of A$1.1 million (S$980,000), but as Mr Jones and his client – and almost everyone involved in the property industry in Australia – knew, the eventual price was likely to be far higher than the guide price.
In the end, Mr Jones bought the property for his client, with a winning bid of A$1.585 million.
Mr Jones said the auction highlighted a practice that is “rife” in the industry, in which agents deliberately underquote the expected price to try to entice potential buyers – even though they know the property is worth more and sellers will not accept that price.
“Underquoting is unfair,” Mr Jones told The Straits Times. “It reduces competition rather than enhances competition.”
Australian state governments, which oversee the property industry, have begun cracking down on the practice, which has plagued
the soaring property market.
The entrenched problem of underquoting, or price baiting, has made it harder for buyers – already struggling with a 47 per cent price rise in the past five years – to hunt for a home they can afford.
In the largest cities of Sydney, Melbourne and Brisbane, the average property prices as at January 2026 were, respectively, A$1.28 million, A$830,000 and A$1.04 million.
Real estate agents and industry insiders say almost all properties are underquoted by at least 10 per cent and by as much as 40 per cent. Agents do this to attract more would-be buyers to auctions, even though many of the interested parties may not have a genuine chance of eventually affording the property.
In New South Wales, about half of the properties on the market are initially slated to be sold by auction, though some may sell beforehand or be removed from sale. In Victoria, about 55 per cent of properties are initially listed for auction.
Houses and more expensive properties tend to be listed for auction – typically held at the property or at an auction house or property agency – rather than being sold by private treaty.
An analysis of more than 10,000 auctions in New South Wales between January 2024 and the end of June 2025 conducted by The Sydney Morning Herald found that 90 per cent of properties sold for more than the guide price, and 48 per cent sold for more than 10 per cent higher than the guide price.
Mr Craig Frost, a real estate agent who co-owns Frost Real Estate in the state of Victoria and who has worked in the industry for 14 years, told ST that underquoting was a “recurring pattern” at auctions.
“Underquoting has been a plague on the real estate industry for years,” he said.
The New South Wales government in November 2025 proposed requiring that all property advertisements include price guides that estimate the home’s value, and that the amount must be updated if an offer higher than the guide was received and rejected.
In addition, agents who underquote would face penalties of A$110,000 – up from A$22,000 currently. The rules are due to be introduced later in 2026.
Experts say that underquoting puts an unfair burden on buyers, who can pay about A$300 to A$700 to prepare for a property purchase – including costs of building and pest reports, and conveyancing – even though they may have been misled by the price guide and have no chance of buying the property.
Mr Frost said buyers were being used as “bidding fodder” to try to give a sense to other buyers that there is intense demand for a particular property. But underquoting is also a risk for vendors because the auction may attract only buyers who cannot afford the reserve price.
“The buyers are looking at a property that they can never afford,” he said.
“The vendor is exposed with an advertised price that they are never actually going to accept. If the property passes in (fails to meet the seller’s reserve price), they are at risk of the public being aware of what the property was passed in for.”
Ms Cate Bakos, a Melbourne buyer’s advocate and the chairwoman of the Property Investment Professionals of Australia, which represents investors, told ST that buyers were disadvantaged “emotionally and financially and from a loss of opportunity”.
“It takes a toll on people,” she said. “Buyers are chasing a mirage and missing out on opportunities to buy other properties. In a moving market, that is quite costly.”
The authorities in Australia have long been aware of the problem of underquoting, but measures and penalties introduced so far have failed to stamp it out.
In September 2022, Victoria introduced an underquoting task force that has since received more than 5,000 complaints from buyers. More than 200 fines have been imposed.
The state government also plans to introduce laws in the middle of 2026 that will require sellers to publish a reserve price – the minimum amount for which they are willing to sell – at least seven days before an auction or fixed-date sale. Agents who breach the rules could be barred from conducting further sales until they comply.
However, Ms Bakos said Victoria’s upcoming new laws were problematic because some sellers may want to set their price only on the day of the auction, especially if other sales of comparable properties happened that week.
She said agents typically present a range of expected prices to vendors and should be required to share this information with buyers.
“The agent is likely to have a solid grasp of where the value of the property sits,” she said.
Analysts are divided on whether underquoting has any impact on the final purchase price. Some say underquoting makes no difference to the ultimate price, while others say that it may occasionally push up the price by attracting a bidder who spends more than they intended.
But Mr Jones said underquoting can also lead to lower prices.
“Vendors can lose with underquoting,” he said. “The agent may guide the price so low that purchasers don’t believe the claim and don’t turn up at the auction.”
