Buyers frustrated with prices soaring above the auction guide should expect a reprieve in Sydney, new data shows.
The proportion of inaccurately quoted price guides dropped by a third in February 2016 compared to last year, according to statistics released on Tuesday by property price prediction company RealAs.
In February 2015, agent underquoting hit an average of 13.9 per cent, compared to 9.7 per cent in 2016.
It is a clear improvement for the first full auction month of the year and the first statistically reliable month since stringent new underquoting laws threatening stiff penalties have been in force, RealAs chief executive Josh Rowe said.
“Whilst we’re only a few weeks into the auction season, it would appear that the NSW underquoting laws are having the desired effect,” Mr Rowe said.
A NSW Fair Trading spokeswoman said Sydney’s property industry is “adapting well with the new laws” and there was a “vast improvement in overall compliance”.
Between the introduction of the laws on January 1 and Saturday, a total of 76 complaints relating to underquoting had been received by the industry regulator.
In total, they conducted 119 “education activities” following a review of more than 5000 real estate advertisements.
“Fair Trading has issued two trader education letters for failing to comply with an undertaking to update advertisements,” the spokeswoman said.
Redfern took the dubious crown of the suburb with the most inaccurate price guides, with agents typically quoting prices 17.4 per cent lower than the final sale price, RealAs data recorded.
This was followed by Newtown and Mosman where agents were typically out of line with the sale price by 12 per cent and 10.5 per cent respectively.
Yet Belle Property’s Charles Touma, who operates in the Redfern region, said 75 per cent of agents were using price guides and that few underquoted.
“I go to every auction in Redfern and I can’t think of more than two or three that have gone above the price guide,” Mr Touma said.
“The market here is back to its best; clearance rates are back to where they were last year,” he said.
Redfern’s clearance rate was close to 93 per cent in February, Domain Group data shows.
âSome agents and industry bodies doubt the increase in price-guide accuracy is due to the law changes, instead arguing it’s a case of market conditions changing.
Real Estate Institute of NSW chief executive Tim McKibbin said the statistics of a decline in underquoting did “not surprise” but that it was due to a flattening market.
“Many consumers, unfortunately, view a good marketing campaign leading to a great sale price for the vendor as an instance of underquoting when in truth it is simply a market on the move up,” he said.
While auction clearance rates were surprisingly strong in February, there were far fewer homes being auctioned than in the same month last year.
The trend line for inaccurate quotes has been steadily down over the year, reducing since a peak in May 2015 of 17.3 per cent. Property price growth has slowed since the strong June quarter.
EPS Property Search buyer’s agent Patrick Bright, who has been outspoken against underquoting, said it was “too soon to tell” whether the legislation was having the desired effect.
“Until sales agents who are doing it are caught and fined for doing it and made an example of it won’t be reduced much as the new rules around it introduced are an improvement. however they are easily gotten around so it won’t stop happening,” he said.
In Melbourne, however, it’s still the “wild west” for underquoting, Mr Rowe said, with inaccurate price guides happening more than twice as often as in Sydney.
Inaccurate price quotes from Victorian agents increased from 19 per cent in February 2015 to 19.5 per cent in February 2016.