Investment approach
Asking price and sale price: why the gap exists
A property portal’s average price per square metre shows what sellers ask, not what buyers pay. We explain the structural reason for this gap and how to recognise it.
A portal shows sellers’ intentions, not transaction outcomes
The asking price and the price at which a sale actually completes are structurally different data, not one number with a margin of error. Our articles on setting the entry price and realistic returns already note that listing data and actual transaction data must not be confused. This article examines not merely the existence of the gap mentioned there, but its structural origins and how to identify it for a particular property.
Why the gap arises
The seller or agent sets the asking price unilaterally, before negotiation. It often reflects the seller’s expectations or comparable prices in OTHER LISTINGS, rather than demonstrated demand from real buyers. Public portals aggregate listings, not registered transactions. Their neighbourhood “average price per m²” therefore reflects what sellers are asking NOW, not what buyers are actually paying NOW. This is neither manipulation nor an error by the portals: it is simply the nature of the data they collect.
How to recognise the difference yourself
To avoid anchoring on an inflated expectation, compare the property with recently completed, genuinely sold comparables rather than other current listings. These are two different datasets, and only the second shows what the market is currently willing to pay. A long time on the market is also a signal, not merely chance. If a property remains unsold at its asking price for a long time, that usually suggests the price exceeds what the market will pay, rather than that “the buyer just has not appeared yet”. A useful practical technique is to consider both completed sale prices and the typical time properties in that segment spend on the market. If a listing lies well outside that range, it is a reason to reconsider price expectations rather than simply keep waiting.
How DNPI applies this in valuation
Our entry-price assessment is based on confirmed comparable transactions rather than portal averages, a principle described in our entry-price article. Part of a listing price may also reflect the agency commission structure built into the advertisement, not just the seller’s expectations. This is discussed in our article on agency commission structures.
Practical steps for an investor
When considering a property, request specific comparable transactions completed in recent months, as close as possible in location, condition and floor area, rather than a neighbourhood average. That calculation, rather than a portal summary, should underpin the offer price. A preliminary model can be prepared with the calculator, but its inputs should be based on actual transactions, not competing advertisements.
Questions and answers
Why does a property portal’s average price per m² differ from actual sale prices?
Portals aggregate listings rather than registered transactions. Sellers set asking prices unilaterally, often referring to other listings rather than confirmed sales.
What does a long time on the market indicate?
It usually indicates that the asking price exceeds what the market is willing to pay, rather than a chance absence of a buyer.
When valuing a property, should it be compared with listings or sold properties?
With recently completed sales of genuinely comparable properties. Comparing current listings reveals other sellers’ expectations, not demonstrated demand.