Hi,
We are continuing to see slow improvement in Domain’s preliminary auction clearance rate, with 396 auctions reported over the weekend. Of these, 232 properties sold under the hammer, 48 were withdrawn, and 116 were passed in, resulting in a preliminary clearance rate of 59%. Last week’s final clearance rate was 52%. The REIV also reported an additional 445 private sales.
The Victorian State Government has indicated it intends to make significant changes to the way property is sold in Victoria. The Government argues these reforms are designed to provide buyers with greater transparency and disclosure.
Firstly, subject to the legislation being passed, reserve prices will need to be published at least seven days before an auction or a fixed-date sale (such as an Expressions of Interest campaign or an Offers Closing campaign). These changes are proposed to commence on 1 October 2026.
Whilst, in theory, this is intended to address the issue of underquoting, there are some significant concerns that could actually make it more difficult for buyers. It is also likely that many vendors will pivot away from auction campaigns and fixed-date sales altogether.
Whilst there has undoubtedly been an issue with underquoting in the past, I have always been a supporter of auction campaigns because they provide transparency. Buyers can see exactly who they are competing against and where the market is placing value on a property (in most cases).
Publishing the reserve price removes a vendor’s ability to change their reserve price, which happens regularly based on previous offers, buyer competition, and changing market conditions. It could also discourage buyers from attending the auction altogether, which, in turn, will reduce competition for the property. These unintended consequences may persuade vendors to look at other methods of selling, such as private sale, which can be much more difficult to navigate due to the lack of transparency and the inability to see the competition buyers are up against. This visibility is one of the key advantages of an auction.
Secondly, the Government also proposes that no contract can be entered into until at least 14 days after the Section 32 Statement is first made available. I am genuinely confused as to who this is intended to help and why this proposal is even being considered. The Government argues that this will give buyers more time to complete their due diligence and seek legal advice without feeling pressured to sign a contract.
However, time can also be the enemy. Buyers change their minds. Vendors change their minds. More buyers can enter the market, creating additional competition. Timing can be everything in a negotiation and can often work to a buyer’s advantage. Remove that flexibility, and a buyer who was ready to proceed may ultimately miss out on the property for a range of reasons.
The State Government needs to understand what actually happens on the ground in the real estate industry. Whilst its intentions may be to help buyers, I don’t believe either of these proposed reforms will achieve that outcome. In fact, they may simply make it harder for buyers to purchase property.
Have a great week.
Kim Easterbrook – Managing Director
