Can you trust real estate agents to give you the full story on house prices?
Real estate agents aren’t obliged to say whether a property has been sold, or how much it has sold for.
If you watch TV shows like The Block you get to see every angle of the sales process.
- With the housing market in decline, not as many real estate agents are disclosing how much properties sold for
- Analysts say the lack of transparency is a sign that property prices are falling
- Agents don’t have to disclose the price, how the property was sold, or the number of bidders
Not just the elated and deflated contestants, but a transparent reserve price, current bids and recent sales.
But in the real world, punters aren’t as lucky.
After a sale, real estate agents don’t have to disclose the price, how the property was sold, or the number of bidders — and vendors can also ask for prices to not be disclosed.
The only legally required information is that sale prices are listed when land titles are transferred through the Valuer-General of each state and territory.
Economist Lindsay David believes a lack of transparent information is hiding the true picture: an unwinding of Australia’s long property boom.
“When you see house prices rise, real estate agents and those with vested interests in the real estate market love to tell society how high house prices are rising,” he said.
“But when house prices start to fall, all of a sudden transparency falls off a cliff”.
Mr David points to disclosed sales prices in the prestigious Sydney suburb of Rose Bay.
Of the 100 properties most recently sold, just 11 disclosed a price. For the 100 before that, 81 disclosed the sale price of the property.
“Real estate agents are not obliged to say whether a property has been sold or not to the relevant agencies,” he said.
“On top of that they’re not obliged to disclose what the highest bid was or what the actual selling price was. There’s a lot of funny stuff going on”.
Aussie buyers in a ‘lucky position’
Companies like Domain and CoreLogic, formerly known as RP Data, capture millions of ‘points’ of data about Australia’s property market and employ people to attend auctions and keep tabs on local markets.
“When you think about the data that is collected, the data that comes from the Valuer-General is seen as gospel, this is the firm data of the sale price,” said Dr Nicola Powell, Domain’s senior research analyst.
“But we do use other methods to collect an indicative sale price as well.”
Dr Powell says the company’s methodology is rigorous, and the same as that used by the government’s own body, the Australian Bureau of Statistics.
CoreLogic operates around the globe and its principal researcher, Cameron Kusher, said Australians were in a lucky position when it comes to understanding the real estate market through timely and robust data.
“In some states the Valuer-General can take up to six months to give you data sets,” he said.
“We move in a market that changes weekly, monthly and we need to have more regular data.
“That’s why ourselves and other groups go to the industry and say ‘we need this quality data at a faster pace than what we can get from the Valuer-General’s department’.”
Mr Kusher said his company checks the accuracy of data volunteered to it, and has found its accuracy to be higher than 95 per cent.
Dr Powell also noted that weekly clearance rates can be subject to fluctuations, such as long weekends, bad weather and even sporting events.
“Monthly clearance rates give a better indication overall of what’s occurring in these auction-centric markets,” she said.
“I will stress the point, there is a strong correlation between price appreciation and those clearance rates, particularly for Melbourne and Sydney, so it does give a good insight, a regular insight into the movement of future prices.”
For consumers, the falling market — and any sellers holding back information — may bring a surprising reward.
“A lack of transparency in the real estate industry really just shoots itself in the foot,” Mr David said.
“When you have a lot of homebuyers out there, completely clueless to what the housing market is doing, it’s pretty easy for them to turn around to these agents and give them a low-ball offer.”