Underpricing in Australia 2025: What It Means for Your Money

Underpricing has become a hot topic in Australia’s financial circles, especially as we enter 2025 with a market landscape shaped by fresh policy, fierce competition, and shifting consumer expectations. Whether you’re eyeing shares in a new IPO, bidding at a property auction, or hunting for deals on everyday products, underpricing can affect your wealth in ways you might not expect.

What Is Underpricing, and Why Does It Happen?

Underpricing occurs when a product, asset, or security is sold below its true market value. In Australia, the most headline-grabbing examples often come from initial public offerings (IPOs) on the ASX, where shares are priced low to ensure strong demand and a successful launch. But underpricing also plays out in property, retail, and even energy markets.

• IPOs: Companies might set a conservative opening price to generate buzz and ensure full subscription.
• Property: Real estate agents sometimes list properties below market value to trigger bidding wars at auction.
• Consumer Goods: Retailers may underprice select items to attract foot traffic or clear old stock.

While underpricing can sometimes offer bargains, it often comes at a hidden cost to sellers and, in the long run, to buyers as well.

Underpricing in 2025: Where Australians Feel It Most

In 2025, underpricing is front and centre in several sectors:

1. The IPO Market

Following a surge of new listings in late 2024, the ASX has seen a renewed debate about whether underpricing is necessary or even ethical. In January 2025, updated ASX guidelines placed more pressure on companies and underwriters to justify their pricing strategies. Investors who manage to snap up IPO shares at the issue price often see instant gains on day one—but long-term value isn’t always guaranteed. A recent example is the much-hyped GreenVolt Energy IPO, which soared 30% on debut, only to settle back within a month, leaving latecomers nursing losses.

2. The Property Market

With housing affordability still a political flashpoint, underpricing at auctions remains controversial. In Sydney and Melbourne, agents often list homes 5–10% below expected sale prices. While this can draw big crowds and spark bidding frenzies, it frustrates genuine buyers and complicates budgeting. The 2025 Fair Trading (Real Estate Advertising) Amendment introduced stricter penalties for agents who deliberately mislead on price guides, but ‘price baiting’ persists in a hot market.

3. Consumer Goods and Services

Retailers are using underpricing more aggressively as cost-of-living pressures bite. Supermarkets and electronics chains have rolled out ‘loss leader’ deals—items sold at or below cost to lure shoppers. While these can offer real savings, they’re often offset by higher prices elsewhere in the store. ACCC’s 2025 guidelines now require clearer disclosure of standard and promotional pricing to help consumers spot genuine value.

The Upsides and Pitfalls of Underpricing

Underpricing isn’t always a bad thing. For buyers, it can mean rare opportunities:

• Early investors in IPOs may see rapid gains.
• Property buyers can sometimes snag a deal if competition is low.
• Shoppers can cash in on genuine bargains during sales events.

But the downsides are real and worth considering:

• Sellers may leave significant money on the table.
• Artificially low prices can distort perceptions of value.
• Repeated underpricing can undermine confidence in markets and brands.

For investors and consumers, the key is to research, compare, and always question why something is priced the way it is. Is it a strategic move—or a red flag?

How to Navigate Underpricing in 2025

Staying savvy about underpricing is more important than ever. Here’s how Australians can protect themselves and make smarter decisions:

• For investors: Dig into company fundamentals before jumping into IPOs. Don’t be swayed by first-day hype.
• For property buyers: Rely on independent valuations and be wary of ‘too good to be true’ price guides.
• For shoppers: Use comparison apps and ACCC resources to distinguish genuine bargains from marketing tricks.

With new regulations rolling out across sectors, transparency is improving—but there’s no substitute for a critical eye and solid research.