CPRC's research report From Search to Sale: Navigating the Victorian Property Market has found property buyers do not have access to accurate information about the price and quality of a property before they buy.
The Consumer Policy Research Centre surveyed 500 Victorians who bought a property in the last five years to understand the challenges people face when searching for and buying a property. Difficulties accessing accurate information leads to poor outcomes - more than a quarter of respondents (27%) reporting they experienced underquoting for a property they’d made an offer on or bid on.
The research highlights a range of difficulties consumers encounter when navigating the Victorian Property Market. Other key findings include:
- The quality of price information in the property market is still problematic. Just over half (52%) of Victorian consumers surveyed considered the Statement of Information was “somewhat” or “very” accurate. 82% of Victorians surveyed want the accuracy of this key disclosure mechanism improved.
- Consumers rely on building and pest reports to make key decisions when buying a property. 11% of Victorians decided not to make an offer & 13% lowered their offer due to major faults based on these reports. 73% of Victorians surveyed want vendors to provide the building and pest inspection.
- The onus on buyers to obtain building and pest reports creates an unnecessary burden and cost. 17% of Victorians surveyed obtained 7 or more building/pest reports during their property search – costing an estimated $4200. Additional out-of-pocket costs are one of the biggest consumer harms where properties are underquoted.
- Underquoting can occur where vendors’ reserve set above the top of the advertised range. 1 in 6 reported the vendors’ reserve wasn’t in the advertised range for the property they bought. 75% of Victorian home buyers want the vendors’ reserve price to be published before auction.
- Underquoting can occur where a property is advertised lower than the estimated selling price. 1 in 7 reported an agent encouraged them to put in an offer higher than the top of the advertised price band. 78% want a more transparent bidding processes.
- The Statement of Information should make reference to objective third party pricing data as well as properties of similar quality to improve the accuracy of price ranges given to consumers.
- Consumer Affairs Victoria should create a free, accessible database which outlines vendors’ reserve prices and purchase prices to provide ongoing market transparency for consumers and market monitoring for market stewards.
- Vendors should be responsible for providing an independent building and pest inspection when a property is put on the market.
- Vendors should publish their reserve price when the property is first put on the market, with any changes to the reserve made and published well in advance of auction.
- Agents should keep records of all written offers made for a property. Records should be made available on request to Consumer Affairs Victoria to allow for easier ongoing monitoring and enforcement action against underquoting.
- Consumer Affairs Victoria should undertake consumer testing and use the insights to introduce mandatory requirements to improve the readability and comprehensibility of the Section 32 key disclosure documentation.
- Buyers should be able to retain a subject to finance clause regardless of how a property is purchased (including at auction).