Listing Acquisition and Differentiation in Constrained Australian Housing Markets:
A Thematic Analysis of Competition, Vendor Behaviour, and Property Presentation
Word count target: ~2,932 words
Assessment level: AQF Level 9
Discipline: Strategic Marketing / Property Economics
Executive Summary
Australia’s residential property market has entered a prolonged period of structural housing undersupply, driven by planning constraints, construction cost inflation, population growth, and reduced dwelling completions. While buyer demand remains resilient in many regions, the constrained flow of new listings has altered competitive dynamics within the real estate industry. Rather than competing primarily for buyers, real estate agents increasingly compete for vendor instructions. This shift has intensified rivalry among agents and placed renewed emphasis on how value is communicated to prospective sellers.
This research project examines how structural housing scarcity and cost-of-living pressures influence competition for listings in Australian residential real estate markets. It further investigates how vendors evaluate real estate agents under conditions of information asymmetry, heightened fee sensitivity, and perceived inevitability of sale outcomes. Using a general industry-level analysis, the project synthesises secondary data from government publications, statutory advisory bodies, peer-reviewed literature, and national media reporting.
The study applies a thematic analytical approach informed by signalling theory, transaction cost economics, behavioural decision-making, and professional services marketing literature. Rather than assuming that property presentation primarily functions as a buyer-facing marketing tool, the project evaluates its role as a vendor-facing signal of competence, credibility, and representation quality during agent selection.
Findings indicate that listing scarcity alters both competitive behaviour and vendor decision-making criteria. While some vendors question the necessity of professional marketing in seller-favoured conditions, evidence suggests that presentation quality continues to function as a credibility signal that mitigates perceived risk in high-value transactions. The research contributes to understanding how differentiation mechanisms operate in professional service markets characterised by constrained supply and heightened competition upstream in the transaction process.
1. Introduction
Australia’s housing system is experiencing a sustained structural imbalance between dwelling supply and population demand. National housing completions have failed to keep pace with household formation, resulting in historically low vacancy rates and elevated property prices across metropolitan and regional markets (National Housing Supply and Affordability Council 2024; Australian Government 2024). These conditions have contributed to affordability pressures for buyers while simultaneously reshaping competitive conditions for real estate intermediaries.
In markets characterised by constrained housing supply, competition among real estate agents increasingly centres on listing acquisition rather than buyer attraction. Industry commentary and national media reporting suggest that reduced transaction volumes have intensified rivalry for vendor instructions, with agents employing a range of tactics to secure a limited pool of listings (Australian Broadcasting Corporation 2024a). This shift challenges traditional assumptions that marketing and presentation primarily function to stimulate buyer demand.
At the same time, cost-of-living pressures have heightened homeowner sensitivity to transaction costs, including agent commissions. Evidence indicates that some vendors are exploring alternative selling pathways, including private sales, in response to perceived reductions in the marginal value of professional representation in seller-favoured markets (Australian Broadcasting Corporation 2024b). These dynamics raise questions regarding how vendors evaluate agent value propositions and what signals influence agent selection decisions under conditions of uncertainty.
The primary objective of this research project is to critically examine the implications of housing scarcity and economic pressure on listing acquisition competition within the Australian residential real estate industry. Specifically, the project seeks to:
Analyse how constrained housing supply alters competitive dynamics among real estate agents;
Examine vendor decision-making behaviour under conditions of information asymmetry and cost pressure;
Evaluate the role of property presentation as a differentiation and signalling mechanism in agent selection.
The report adopts a general industry-level approach rather than a firm-specific case study. This allows for broader applicability of findings across Australian residential markets and avoids conflating firm-level performance with structural market forces. The project is structured as follows. Section 2 reviews relevant theories and analytical frameworks. Section 3 outlines the research methodology and data sources. Sections 4 and 5 present the analysis, discussion, and implications. The report concludes with a synthesis of findings and their contribution to understanding competition in constrained property markets.
2. Review of Relevant Theories and Frameworks
Theoretical grounding is essential for interpreting competitive behaviour and decision-making in markets characterised by information asymmetry and structural constraints. This project draws on a targeted set of theories and frameworks that are directly relevant to real estate services, vendor-agent relationships, and differentiation under scarcity.
2.1 Signalling Theory
Signalling theory addresses how parties with superior but unobservable qualities communicate credibility in environments characterised by information asymmetry (Spence 1973). In such contexts, observable actions or attributes serve as signals that allow one party to infer the quality of another. For a signal to be effective, it must be sufficiently costly or difficult to imitate, ensuring that lower-quality actors cannot easily replicate it.
In professional service markets, clients often lack the expertise required to directly assess service quality prior to engagement. As a result, they rely on signals such as credentials, reputation, and the quality of visible outputs (Kirmani & Rao 2000). In residential real estate, vendors typically engage agents infrequently and face uncertainty regarding agent competence, diligence, and representation quality. Signalling theory therefore provides a relevant lens for analysing how presentation quality and marketing outputs influence vendor perceptions during agent selection.
2.2 Transaction Cost Economics
Transaction cost economics (TCE) examines how economic actors seek to minimise the costs associated with exchanging goods and services, including search, negotiation, and enforcement costs (Williamson 1985). When transaction costs rise or perceived benefits decline, parties may seek alternative arrangements that reduce intermediary involvement.
Within residential real estate markets, rising cost-of-living pressures and elevated commission scrutiny suggest an increased focus on transaction cost minimisation by vendors (Australian Parliament House 2023). The emergence of private sale platforms and media reporting on commission avoidance indicate that some homeowners are reassessing the value of agency services under seller-favoured conditions (Australian Broadcasting Corporation 2024b). TCE provides a framework for analysing this behaviour without assuming irrationality or disengagement from professional services.
2.3 Behavioural Decision-Making and Heuristics
While transaction cost economics assumes rational evaluation, behavioural decision-making literature highlights that individuals often rely on heuristics when faced with complex, high-stakes decisions under uncertainty (Kahneman & Tversky 1979). Residential property transactions involve substantial financial and emotional risk, increasing reliance on cues such as trustworthiness, professionalism, and perceived competence.
Behavioural research suggests that visual cues and presentation quality significantly influence trust formation and perceived expertise, particularly when objective performance metrics are unavailable (Kotler & Keller 2016). This perspective is particularly relevant in seller-favoured markets, where vendors may perceive sale outcomes as assured yet remain concerned about representation quality and reputational risk.
2.4 Professional Services Marketing and Differentiation
Professional services differ from goods markets in that quality is often difficult to evaluate even after consumption, rendering them credence-based offerings (Zeithaml, Bitner & Gremler 2020). In such markets, differentiation strategies typically emphasise credibility, consistency, and relationship-building rather than price competition alone.
Marketing literature suggests that excessive reliance on price-based competition in professional services can erode perceived quality and long-term trust (Porter 2008; Kotler & Keller 2016). This framework provides a basis for evaluating whether property presentation functions merely as a tactical marketing input or as a strategic differentiation mechanism in listing acquisition.
3. Methodology and Methods
3.1 Research Design
This project adopts a qualitative, secondary-data-based research design. Given the macroeconomic and structural nature of housing supply constraints, primary data collection was deemed less suitable than a synthesis of authoritative secondary sources. The research is exploratory and analytical in nature, seeking to interpret patterns rather than test causal hypotheses.
3.2 Secondary Data Sources
Secondary data were drawn from multiple credible sources to ensure triangulation and analytical rigour. These sources include:
Australian Government budget papers and housing policy documents (Australian Government 2024);
Reports from statutory advisory bodies, including the National Housing Supply and Affordability Council (2024);
Parliamentary inquiries into cost-of-living pressures (Australian Parliament House 2023);
Peer-reviewed academic journals covering marketing, economics, and behavioural decision-making;
National media reporting from the Australian Broadcasting Corporation (2024a; 2024b).
Secondary data sources were selected based on relevance, credibility, and alignment with the research objectives. Where media sources were used, they were employed to contextualise behavioural trends rather than as sole evidence of economic conditions.
3.3 Analytical Approach
The analysis employs a thematic analytical approach, consistent with qualitative research methods used to interpret complex secondary datasets (Saunders, Lewis & Thornhill 2019). Data were coded into recurring themes relevant to listing acquisition competition, including:
Housing scarcity and reduced listing volumes;
Cost sensitivity and transaction cost minimisation;
Information asymmetry and trust formation;
Differentiation through presentation and signalling.
These themes are examined comparatively through the theoretical lenses outlined in Section 2. Rather than applying a single framework deductively, the analysis evaluates how different theories explain observed market behaviour, allowing for critical comparison and synthesis.
4. Analysis and Findings
This section presents a thematic analysis of secondary data relating to housing supply constraints, vendor behaviour, and competitive dynamics within the Australian residential real estate industry. Rather than examining variables in isolation, the analysis integrates government statistics, policy reports, and industry commentary through multiple theoretical lenses to identify recurring patterns and tensions.
Four dominant themes emerged from the data:
Structural listing scarcity and intensified intermediary competition
Heightened vendor cost sensitivity and transaction cost minimisation
Information asymmetry and trust deficits in agent selection
The evolving function of property presentation under seller-favoured conditions
These themes are examined sequentially, with each interpreted through relevant theories introduced in Section 2.
4.1 Structural Housing Scarcity and Listing Competition
Australian housing supply data consistently indicate that dwelling construction has failed to keep pace with population growth and household formation. The National Housing Supply and Affordability Council (2024) reports a persistent shortfall between required and actual dwelling completions, projecting cumulative undersupply to worsen in the absence of structural reform. Budget Paper No. 1 similarly acknowledges that planning delays, construction cost inflation, and labour shortages have constrained new housing delivery (Australian Government 2024).
While such conditions have sustained price growth and buyer competition, they have simultaneously reduced the volume of properties entering the market. ABC News reporting highlights that transaction volumes in several regions have declined despite ongoing demand, resulting in fewer listings available for sale at any given time (Australian Broadcasting Corporation 2024a). This divergence between buyer demand and listing availability has direct implications for competitive dynamics among real estate agents.
From a structural competition perspective, reduced supply intensifies rivalry among intermediaries competing for a limited resource—vendor instructions (Porter 2008). In contrast to buyer-led competition models, agents must increasingly differentiate themselves upstream in the transaction process. Evidence of intensified listing prospecting, unsolicited homeowner contact, and commission discounting reported in national media aligns with this interpretation (Australian Broadcasting Corporation 2024a).
However, the data also suggest that listing scarcity alone does not fully explain observed behaviours. While scarcity increases rivalry, it does not inherently determine how agents compete. This distinction becomes clearer when examined through complementary theoretical lenses in subsequent sections.
4.2 Vendor Cost Sensitivity and Transaction Cost Minimisation
Cost-of-living pressures have emerged as a significant contextual factor influencing homeowner decision-making. Parliamentary inquiries into cost-of-living pressures note that housing-related expenses, including mortgage servicing and transaction costs, have increased materially in recent years (Australian Parliament House 2023). These pressures shape vendor perceptions of value when engaging professional services.
Transaction cost economics provides a useful framework for interpreting these behaviours. According to Williamson (1985), economic actors seek to minimise the total costs associated with exchange, particularly when perceived benefits decline. In seller-favoured markets, where properties are expected to attract strong interest regardless of marketing effort, the marginal perceived benefit of professional agency services may diminish.
ABC News reporting documents a measurable increase in homeowners exploring private sale pathways, motivated by a desire to avoid commission fees and retain sale proceeds (Australian Broadcasting Corporation 2024b). Importantly, this behaviour does not necessarily imply a rejection of professional competence but reflects a reassessment of intermediary value under changed market conditions.
When interpreted through transaction cost economics, commission scrutiny and private sale consideration appear as rational responses to economic pressure rather than behavioural anomalies. This contrasts with signalling theory, which would predict continued reliance on professional cues even in high-demand markets. The coexistence of these behaviours highlights a key tension explored later in this analysis.
4.3 Information Asymmetry and Trust Deficits in Agent Selection
Despite increased fee sensitivity, vendors continue to face substantial information asymmetry when selecting real estate agents. Service quality in real estate is difficult to evaluate ex ante, and outcomes such as sale price and time-on-market are influenced by numerous external factors beyond agent control (Zeithaml, Bitner & Gremler 2020).
Behavioural decision-making literature suggests that in such contexts, individuals rely on heuristics and observable cues to infer competence and reduce uncertainty (Kahneman & Tversky 1979). This is particularly relevant in residential property transactions, which involve high financial stakes and reputational considerations for vendors.
National media reporting indicates that even vendors considering private sales often seek informal validation of pricing, marketing approach, or presentation standards prior to listing (Australian Broadcasting Corporation 2024b). This behaviour suggests that trust deficits persist even when formal agency engagement is questioned.
Signalling theory provides an explanatory framework for this phenomenon. Spence (1973) argues that in markets characterised by information asymmetry, observable signals function as proxies for underlying quality. In real estate, signals may include presentation quality, marketing materials, and perceived professionalism, all of which are costly to replicate consistently without underlying competence.
The persistence of signalling behaviours alongside transaction cost minimisation illustrates a duality in vendor decision-making: vendors seek to reduce costs while simultaneously mitigating perceived risk. This duality complicates simplistic interpretations of seller behaviour and underscores the need for multi-theoretical analysis.
4.4 Property Presentation Under Seller-Favoured Market Conditions
Conventional real estate marketing logic frames property presentation primarily as a mechanism for attracting buyers and maximising sale outcomes. Industry research supports the role of high-quality visual presentation in increasing online engagement and buyer interest (National Association of Realtors 2023). However, the relevance of this function is contested in seller-favoured markets where properties are perceived to sell regardless of marketing quality.
Secondary data reveal mixed vendor attitudes toward presentation investment under current conditions. While some homeowners question the necessity of professional marketing when demand is strong, others continue to evaluate agents based on presentation standards and prior marketing examples (Australian Broadcasting Corporation 2024a).
This apparent contradiction can be resolved by distinguishing between buyer-facing and vendor-facing functions of presentation. From a signalling theory perspective, presentation operates less as a demand-generation tool and more as a credibility signal during agent selection. High-quality presentation demonstrates effort, competence, and attention to detail—attributes that are costly to fake and therefore informative (Spence 1973).
Behavioural trust theory further suggests that presentation quality reduces perceived risk even when outcome certainty is high (Kotler & Keller 2016). Vendors may accept that a property will sell, yet remain concerned about representation quality, reputational impact, and process execution. Presentation thus functions as a reassurance mechanism rather than a sales accelerator.
This interpretation aligns with professional services marketing literature, which emphasises that in credence-based services, visible outputs often substitute for objective performance measures (Zeithaml, Bitner & Gremler 2020). Accordingly, property presentation retains strategic relevance even as its buyer-facing utility becomes contested.
5. Discussion and Implications
The findings reveal that competition for listings in constrained Australian housing markets cannot be explained through a single theoretical framework. Instead, vendor behaviour and agent competition reflect the interaction of structural scarcity, economic pressure, and behavioural heuristics.
From a Porterian perspective, listing scarcity intensifies rivalry among agents by constraining access to vendor instructions (Porter 2008). However, transaction cost economics demonstrates that intensified rivalry does not necessarily translate into increased willingness to pay for professional services. Instead, economic pressure encourages commission scrutiny and experimentation with alternative selling pathways (Williamson 1985; Australian Broadcasting Corporation 2024b).
Signalling theory and behavioural decision-making provide a complementary explanation for why professional cues persist despite these pressures. Vendors continue to rely on observable signals of competence to mitigate risk in high-value transactions, even when sale outcomes appear assured (Spence 1973; Kahneman & Tversky 1979). Property presentation emerges as one such signal, functioning primarily in the upstream competitive context of agent selection.
Critically, the data suggest that presentation effectiveness is contingent on its perceived signalling value rather than its capacity to materially alter buyer demand. Standardised or easily replicable marketing outputs may lose differentiation power under conditions of widespread adoption. Conversely, presentation approaches perceived as effort-intensive or contextually tailored are more likely to function as credible signals.
The analysis also highlights a structural paradox within seller-favoured markets. While strong demand reduces reliance on professional marketing for transactional outcomes, it simultaneously intensifies competition among intermediaries for legitimacy and trust. This paradox explains why some vendors discount presentation while others continue to prioritise it during agent selection.
6. Conclusions
This research project examined how structural housing supply constraints and cost-of-living pressures reshape competitive dynamics within Australian residential real estate markets, with particular emphasis on listing acquisition and vendor decision-making. Drawing on secondary data from government publications, statutory advisory bodies, peer-reviewed literature, and national media reporting, the study adopted a general industry perspective to avoid firm-specific bias and to foreground structural market forces.
The analysis demonstrates that housing undersupply alters competition by constraining the flow of listings rather than buyer demand. This shift intensifies rivalry among real estate intermediaries upstream in the transaction process, as agents compete for vendor instructions rather than focusing solely on buyer attraction. Porterian competition theory explains the increase in rivalry under scarcity, yet it does not fully account for observed vendor behaviour when economic pressure is introduced.
Transaction cost economics provides a complementary explanation, showing that rising cost-of-living pressures encourage vendors to scrutinise commissions and, in some cases, explore private sale alternatives. Importantly, this behaviour reflects rational cost minimisation rather than a wholesale rejection of professional services. The persistence of professional engagement, even when questioned, highlights the limits of purely economic explanations.
Behavioural decision-making theory and signalling theory together account for this apparent contradiction. Vendors face significant information asymmetry when selecting agents and therefore rely on observable cues to infer competence and reduce perceived risk. Even in seller-favoured markets, where sale outcomes appear relatively assured, trust formation and representation quality remain salient concerns. Property presentation emerges as a visible, effort-intensive signal that conveys professionalism and credibility in this context.
The findings suggest that property presentation should not be conceptualised solely as a buyer-facing marketing tool. Its strategic relevance lies increasingly in its vendor-facing signalling function during agent selection, particularly in markets characterised by constrained supply and heightened competition among intermediaries. However, the effectiveness of presentation as a signal is contingent on its perceived differentiation value. Standardised or easily replicable outputs are less likely to convey credible information about underlying service quality.
This study contributes to the literature by integrating economic, behavioural, and signalling perspectives to explain competitive behaviour in professional service markets under structural constraint. It also highlights the importance of evaluating marketing artefacts not only by their downstream impact on demand but by their upstream role in shaping trust and selection decisions under uncertainty.
The research is limited by its reliance on secondary data and its focus on Australian residential markets. Future research could extend this analysis through primary data collection, such as interviews with vendors and agents, or by quantitatively testing the relationship between presentation quality and listing acquisition outcomes. Nonetheless, the findings provide a robust theoretical framework for understanding how differentiation mechanisms operate when supply constraints reshape competition.
References
Government & Statutory Sources
Australian Government 2024, Budget paper no. 1: Budget strategy and outlook 2024–25, Commonwealth of Australia, Canberra, viewed 10 January 2026,
https://archive.budget.gov.au/2024-25/index.htm.
National Housing Supply and Affordability Council (NHSAC) 2024, State of the housing system 2024, Australian Government, Canberra, viewed 10 January 2026,
https://nhsac.gov.au/sites/nhsac.gov.au/files/2024-05/state-of-the-housing-system-2024.pdf
Australian Parliament House 2023, Cost of living pressures: Housing affordability, Senate Select Committee on Cost of Living, Parliament of Australia, Canberra, viewed 10 January 2026,
https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Cost_of_Living.
National Media (Contextual Evidence)
Australian Broadcasting Corporation (ABC) 2024a, Housing shortage and property market pressures, ABC News, viewed 10 January 2026,
https://www.abc.net.au/news/topic/housing.
Australian Broadcasting Corporation (ABC) 2024b, Private home sales gain traction as sellers look to avoid agent commissions, ABC News, viewed 10 January 2026,
https://www.abc.net.au/news/2024-09-04/private-home-sales-gain-traction-cost-of-living-savings/104285584.
Peer-Reviewed Academic Literature
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https://academic.oup.com/qje/article/87/3/355/1909419.
(Official journal landing page)
Kirmani, A & Rao, AR 2000, ‘No pain, no gain: A critical review of the literature on signalling unobservable product quality’, Journal of Marketing, vol. 64, no. 2, pp. 66–79,
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Kahneman, D & Tversky, A 1979, ‘Prospect theory: An analysis of decision under risk’, Econometrica, vol. 47, no. 2, pp. 263–291,
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Porter, ME 2008, ‘The five competitive forces that shape strategy’, Harvard Business Review, January, pp. 78–93,
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Williamson, OE 1985, The economic institutions of capitalism, Free Press, New York,
https://books.google.com/books/about/The_Economic_Institutions_of_Capitalism.html?id=lj-6AAAAIAAJ&utm_source=chatgpt.com
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https://www.mheducation.com/highered/product/services-marketing-integrating-customer-focus-across-the-firm-zeithaml.html?pd=search&viewOption=student
Kotler, P & Keller, KL 2016, Marketing management, 15th edn, Pearson Education, Harlow,
https://www.pearson.com/en-au/subject-catalog/p/marketing-management/P200000006459.
Industry Research
National Association of Realtors (NAR) 2023, Profile of home buyers and sellers, NAR Research Group, Washington DC, viewed 10 January 2026,
https://www.nar.realtor/research-and-statistics/research-reports.
Research Methods
Saunders, M, Lewis, P & Thornhill, A 2019, Research methods for business students, 8th edn, Pearson Education, Harlow,
https://www.pearson.com/en-au/subject-catalog/p/research-methods-for-business-students/P200000006342.