Melbourne’s New Reserve Price Rule: Why Underquoting Is About to Get Harder to Hide

For Melbourne buyers, one of the most frustrating parts of buying at auction has always been the uncertainty between the advertised price guide and the number the vendor is actually prepared to accept.

From October 2026, that gap is about to become much harder to hide.

Victoria’s new property price transparency rules begin on 1 October 2026. For auctions and fixed-date sales held on or after 16 October 2026, the seller’s reserve price must be published as a single dollar figure at least seven days before the sale. All advertising must then be updated to reflect that reserve.

If the reserve has not been publicly available for the full seven days, the auction or fixed-date sale cannot proceed. And if the vendor changes the published reserve — whether upwards or downwards — the seven-day period starts again.

For buyers who have spent years wondering whether a Melbourne auction guide bears any resemblance to the vendor’s real expectations, that is a significant change.

What Is Actually Changing on 1 October 2026?

Under Victoria’s existing underquoting rules, an agent cannot advertise a residential property below the agent’s estimated selling price, the vendor’s asking price where one has been provided, or a written offer that has already been rejected because it was too low.

The problem for auction buyers has been that vendors have traditionally been able to leave the reserve price unset until very late in the campaign — sometimes until auction day itself.

That changes under the new system.

For relevant auctions from 16 October 2026, the agent must obtain the reserve from the vendor in writing, publish it at least seven days before the auction and update the property's marketing accordingly. The figure must be expressed as a specific dollar amount rather than language such as “from”, “over” or “$X+”.

Victoria is also replacing the Statement of Information with a new Property Price Statement, with additional information about the subject property and comparable sales. Sold prices will also have to be added to the Property Price Statement within seven days after a sale becomes unconditional, subject to applicable exemptions.

For buyers, the practical result is a much clearer price signal before auction day.

Does This Mean Melbourne Underquoting Is Finished?

No.

The new rules make one important part of the process more transparent, but they do not tell you what a property is actually worth.

An auction reserve price is the lowest figure at which the vendor has indicated they are prepared to sell at auction. It is not a valuation and it is not necessarily the final sale price. Competitive bidding can still take a property well above reserve.

Consumer Affairs Victoria specifically notes that a property selling for more than its advertised price does not automatically prove underquoting. Genuine competition between buyers can push the final result higher.

That means buyers still need to separate three different numbers:

the advertised price or indicative selling price, the published reserve price, and the property's independently assessed market value.

They may be similar. They may also be very different.

Forge has previously explained why buyers should treat a price guide as a starting point rather than a ceiling when navigating Melbourne's softer market. How to Buy Smart in Melbourne’s Soft Property Market

The new reserve disclosure gives buyers another useful data point. It does not remove the need to analyse the evidence.

The Most Important Number May Still Be Your Own

Imagine a property is advertised around $900,000 during its campaign.

Seven days before auction, the reserve is published at $960,000.

For a buyer, that is immediately useful information. Instead of spending auction morning wondering whether the vendor secretly wants $1 million, you now know the minimum published threshold.

But the next question should not be:

“Can I afford $960,000?”

It should be:

“Do comparable sales justify $960,000?”

A disciplined buyer should review recent sales of genuinely similar properties — not simply the three cheapest examples available.

Consumer Affairs Victoria strengthened its comparable-property guidance in late 2025 after its Underquoting Taskforce identified cases where less comparable, lower-priced properties were being used when estimating selling prices. Agents are expected to consider factors including location, condition, property standard and sale date when selecting comparables.

This is where independent buyer advocacy can become particularly valuable.

Rather than treating the newly disclosed reserve as the answer, a buyer's advocate can compare it with recent transactions, building quality, floorplan, orientation, land component, condition and local supply to establish an evidence-based walk-away number before bidding begins.

Price Transparency Does Not Replace Property Due Diligence

There is another trap buyers need to avoid.

A more transparent price does not necessarily mean a more transparent property.

Questions around hidden rooms, inaccessible storage areas, covered windows, water damage, unusual alterations or building defects are separate from underquoting laws.

Before an unconditional property auction, buyers should investigate anything they cannot properly inspect.

That can include reviewing the contract and title documents, checking plans and easements, requesting access to locked or concealed areas and arranging an independent building inspection where appropriate.

This matters particularly at auction because Victorian auction contracts are generally unconditional. Buyers cannot simply win the property and then make the purchase subject to finance or a satisfactory building inspection, and there is no cooling-off period for an auction purchase.

Property suitability can go beyond conventional defects as well. Buyers with current or future accessibility requirements may want to assess whether entrances, bathrooms and internal circulation can reasonably be modified. Melbourne providers such as Mobility Access Modifications show examples including ramps, doorway widening and bathroom modifications that illustrate the kinds of changes some homes may require.

The broader principle is simple: do not leave important unknowns until after you have made an unconditional bid.

A Better Pre-Auction Process Under the New Rules

The new reserve-price system gives buyers a useful seven-day window to reassess the property before auction day.

A practical pre-auction check should cover:

Compare the published reserve with genuinely comparable recent sales.

Recalculate your own maximum price rather than automatically adopting the vendor's reserve.

Review the contract, title, plans, Owners Corporation material where relevant and any known easements or restrictions.

Complete any building or specialist inspections before bidding.

Keep copies of advertisements, price statements and written representations made during the campaign.

Decide your walk-away number before the auction begins.

Forge’s guide to Melbourne auction bidding strategy also explains how preparation, finance and a predetermined limit can reduce the risk of emotional bidding on auction day. How to Win a Melbourne Auction With a 60% Clearance Rate

What Happens If the Property Passes In?

The disclosed reserve also makes the post-auction situation easier to understand.

If bidding does not reach the reserve, the property can be passed in.

Under Victorian auction rules, when a property is passed in below reserve, the highest bidder must be given the first opportunity to negotiate with the vendor before the property is offered to another bidder. This applies even where the final bid was a vendor bid.

That does not mean the highest bidder has to accept the vendor's counteroffer.

The same valuation work still applies.

If your analysis says the property is worth $950,000 and the vendor wants $1 million after it passes in, the fact that you hold the first negotiation opportunity does not suddenly make the property worth another $50,000.

Forge has a more detailed breakdown of what happens when a property passes in, together with the distinction between legal vendor bids and illegal dummy bidding. Understanding Underquoting, Dummy Bids and Your Rights at a Melbourne Auction

What If You Suspect Underquoting?

Keep evidence.

Consumer Affairs Victoria asks buyers reporting suspected underquoting to provide material such as the property address, agent details, screenshots of advertisements, the relevant price statement, written representations and an explanation of why the marketing appears misleading.

A surprising auction result by itself is not necessarily evidence of underquoting.

A documented pattern showing that advertised pricing did not reflect information already known during the sales campaign can be much more relevant.

Consumer Affairs Victoria continues to operate an Underquoting Taskforce and says it can examine estimated selling prices, indicative pricing and the comparable sales selected by an agent when investigating conduct.

What the New Reserve Price Rule Means for Melbourne Buyers

The October reforms do not eliminate auction competition, guarantee an accurate final sale price or replace independent property research.

What they do is remove one major piece of uncertainty.

For auctions held from 16 October 2026, buyers should generally no longer arrive on auction morning without knowing the vendor's published reserve. That gives them time to compare the number with recent sales, organise final due diligence and decide — before the pressure of bidding begins — exactly where they will stop.

The smartest way to use the new rule is therefore not to treat the disclosed reserve as your new budget.

Treat it as evidence.

Then compare that evidence with the property's condition, comparable sales and your own assessment of value.

That is the difference between simply knowing the seller's number and knowing what the property is worth to you.

Forge Real Estate Melbourne can help you blueprint your future by finding the perfect blue-chip property where your lifestyle needs and investment goals converge.

📞 Phone: (03) 91003633

✉️ Email: info@forgeproperty.com.au

🌐 Website: www.forgerealestate.com.au

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