Real Estate Agent Criticizes Homebuyers for Using AI to Negotiate Prices

A growing trend of homebuyers using artificial intelligence to challenge property prices is being criticized by real estate professionals, who say the technology is misleading buyers and contributing to a slower market. Amir Jahan, director at A-Class Estate Agents, stated that artificial intelligence platforms are feeding buyers false information about market values.

Jahan recounted an instance where a prospective buyer presented a ChatGPT valuation of $550,000 for a unit listed at $700,000, questioning the seller's asking price. He noted that an over-reliance on such AI tools has caused some buyers to withdraw from potential sales, convinced the properties are overpriced. This, combined with advice from friends, is making buyers more cautious and deliberate in their purchasing decisions compared to previous years, Jahan said.

"They are more logical on what they want to do compared to nine months or a year ago," Jahan commented, adding that the trend is slowing down the market as buyers take longer to evaluate properties and scrutinize prices.

Recent data indicates a broader slowdown in the property market, with auction clearance rates in Australia's major cities hitting their lowest levels since the COVID-19 pandemic. Cotality data showed Sydney experiencing its weakest week of auction sales in over six years, and Melbourne recording a five-year low.

Jahan observed that buyers are no longer influenced by high-pressure sales tactics that previously fueled bidding wars during market booms. Instead, they are conducting their own research, assessing properties based on their individual merits, and making offers only when they perceive genuine value. "They just come, have a look and if they like it, they pay for it. If they don't like it, they go," he said.

Tim Lawless, research director at Cotality, projected that the capital city average clearance rate—the percentage of auction properties meeting their reserve price—is likely to continue declining, potentially falling into the low 40% range. "Since mid-May, the volume of auctions has held consistently lower year-on-year, indicating cyclical factors are at play as vendors rethink their selling plans amid persistently weak clearance rates," Lawless stated.

Nationally, the capital city clearance rate stood at 42.3%. Sydney's rate was 47.3%, a slight decrease. Melbourne's clearance rate dropped to 50.2%, its lowest point since September 2021. Adelaide, however, saw a significant increase in its clearance rate, rising to 68.7% from 40% the previous week, with a higher volume of properties going to auction. Brisbane recorded the lowest clearance rate among capital cities at 39.3%, though this marked an increase from the prior week. The Australian Capital Territory experienced a decrease in its preliminary clearance rate and auction volume.

The total number of auctions across the country also decreased, with 1,771 properties auctioned compared to 1,880 the week before.

This market slowdown has also been partly attributed to the Australian government's recently announced tax reforms. These changes include replacing the 50% capital gains tax discount with a new system featuring a 30% flat tax and an inflation discount. Negative gearing rules are also being tightened, with tax concessions to be limited to newly built properties, while existing arrangements will be grandfathered. These reforms are expected to diminish the attractiveness of residential property as an investment, potentially reducing buyer demand.