Home prices will be disclosed by law under a proposed change to Victoria’s property market.
Victorian home sellers will soon be forced to disclose the price they get for their home after a nation-first move from the Allan government.
As part of an expansion to combat underquoting and market fairness, real estate agents will be required to publicly disclose the sale price of all homes they sell once the deal is unconditional — giving a better understanding of how the market is tracking.
While supportive of the change, industry members have questioned how it will impact off-the-plan sales in the development sector, where sale disclosures are notoriously hard to come by, and warned it could lead to impacts for subscription data providers who charge real estate professionals for the latest sales data.
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The announcement follows a series of government moves to combat underquoting and perceptions of unfairness in the state’s property market including plans to ban home sellers from going to auction unless they reveal their reserve price seven days ahead of the planned sale date.
In announcing the plan for price disclosure, Consumer Affairs minister Nick Staikos said home buying was a stressful process and disclosing prices would make it fairer.
“This is artificially inflating house prices, that’s not fair and why we’re changing the system,” Mr Staikos said.
“Underquoting is illegal and we’re taking action to stamp it out.”
Yesterday, the state government also announced plans to investigate and implement legislation requiring home sellers to fund a building and pest inspection report to buyers, instead of the current system under which this is a buyer-born cost.
At present home prices are often left undisclosed following sales, typically at the discretion of vendors seeking privacy.
The result is that some prices do not become available until after they are reported to the Valuer General or the State Revenue Office, potentially after the six month timeline set for comparable sales used to generate property price guides in Victoria.
Industry members have indicated in some instances this can cause reporting delays in excess of six months, and there are scenarios where the price is never disclosed.
The Allan government will soon force home sellers to disclose home prices. Picture: NewsWire / Andrew Henshaw.
The Herald Sun understands that the government’s proposal is still months away from taking effect, but will impact sales this year.
The mandatory price disclosure announcement is the second in as many days from the government that follows Real Estate Institute of Victoria calls to amend the state’s housing market, with the lobby group having suggested it as well as a call for building and pest inspections earlier in the week.
Real Estate Institute of Australia president Jacob Caine said the blueprint they had put forward is effective and they are confident if implemented as a whole it could eliminate underquoting from the market.
“One of the biggest complaints we have heard from across the sector is that people don’t have access to all of the information to help inform what their view of the value of a property is at a given moment in time,” Mr Caine said.
“By having access to all of these figures immediately upon the point of sale, the landscape opens up and people have more immediacy to the data.
“That helps buyers, sellers and agents trying to gauge the market.”
The REIV has sought to have prices disclosed once a sale becomes unconditional, but it is not yet clear if that will be adopted or an alternative timeline will apply.
REIA president Jacob Caine says the changes will help, but are part of a raft of amendments needed to eliminate underquoting.
“Our expectation is that the rule, as recommended by the Real Estate Institute, will be for prices to be disclosed once the sale is unconditional,” Mr Caine said.
They have also outlined scenarios, such as family violence matters, where disclosing prices may be harmful and that this might not occur.
“The REIV in its recommendation highlighted instances of exemptions, such as matters of family disputes, but there would need to be criteria that needed to be met – and there would need to be demonstrable issues from that information going public,” he said.
“Ultimately what we are aiming for here in Victoria is a fair and equitable housing market.
“The overwhelming majority of the community is calling for greater transparency. And that is what this measure delivers.”
Property Investment Professionals of Australia chair Cate Bakos said the requiremnt to disclose sale prices was the best the government had made and could even eliminate the need for reserve price disclosure, if buyers used the additional market information wisely and researched their purchases properly.
However, Ms Bakos said there would be a number of parties unhappy with the announcement.
“Agents that don’t get a great result, vendors that want privacy and the data houses that love to sell subscriptions,” she said.
The prominent buyers advocate noted that groups who collate sales price information and sell that to agents under subscription might find there was significantly less demand in Victoria after the changes come through.
Ms Bakos added that she wanted to know if the government would be compelling the disclosure of what homes actually rented for after being advertised, and what off-the-plan sales prices were.
PIPA chair Cate Bakos says the disclosure of all sales prices is an important step for the market and could even remove the need for for reserve price disclosure for sales.
“If you want to clean up price disclosure, you need to clean up all prices,” Ms Bakos said.
With off-the-plan sales regularly including rebates as incentives, and developers rarely disclosing sale prices, Ms Bakos said it was one of the most difficult spaces to obtain accurate sales information from.
With the Victorian government prioritising in-fill development for median and high-density housing in established suburbs, and making a number of announcements paving the way for more construction of apartment towers, it is likely a growing share of buyers will be facing purchasing in this environment.
“Given that’s the case, they need to assure buyers that there is price transparency in that segment of the market,” Ms Bakos said.
She added that off-the-plan was at times the “most deceptive and misleading” part of the market.
Keating Real Estate boss John Keating has been fighting against underquoting throughout his decades long career and said the proposal would absolutely play a role in ending the hated practice.
“Rogue agents will not be able to rely on cherry picking certain sales,” Mr Keating said.
The agent also rejected concerns around privacy.
“I think the reality of it is, auctions are certainly public and if people make that decision, the result is there,” he said.
“And the disclosure of prices in private sales to correctly inform the market is the reality of today.
You know what the prices are in any other market, be it shares or cars, and prospective vendors are entitled to know what price things are selling at, and so are purchasers.”
Victorian Consumer Affairs minister Nick Staikos was part of announcements a day earlier to require vendors to obtain pest and building inspections. Picture: NewsWire / Diego Fedele
Mr Keating added that with sometimes lengthy delays in the timeline for prices to be disclosed, it was common for the market to have moved before this occurred leaving buyers, sellers and agents to have acted without potentially relevant information.
It is not clear yet if the government will look at additional REIV proposals, but significant ones gazetted a three-day timeline for reserve disclosures instead of the government’s proposed seven days, as well as mandatory use of a single price for private sales.
They have also proposed a drivers license-style demerit system for agents caught doing the wrong thing, with the worst punishments being reserved for those who repeatedly offend.
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