Fast, But Is It Fair? The Dark Side of AI in Real Estate
Artificial intelligence is rapidly reshaping Australian real estate. From instant property valuations to predictive maintenance, AI promises efficiency, speed, and cost savings. But with any powerful technology, there is a darker side. For agencies, investors, and buyers, understanding the risks is as important as chasing the opportunities.
AI in real estate raises serious questions about bias, privacy, and regulation. If these challenges are not addressed, the industry could face reputational damage and eroded trust.
Bias in Screening and Lending
One of the most promising uses of AI in real estate is tenant screening and mortgage assessments. Algorithms can analyse large volumes of data — income, credit history, rental track record — and make faster decisions than any human team. The problem? These systems are only as fair as the data they are trained on.
The Australian Human Rights Commission (2020) has warned that AI systems can unintentionally embed discrimination, particularly when trained on historic datasets that reflect existing inequalities. In housing, this could mean applicants are denied rentals or loans based on factors that correlate with race, gender, or postcode rather than actual reliability. Similarly, as The Economist (2021) put it, “Algorithmic bias is often described as a thorny technical problem. Machine-learning models can respond to almost any pattern — including ones that reflect discrimination.”
For example, an AI tool may downgrade an applicant because they live in an area with historically higher rental defaults, even if their individual history is spotless. This is not just unfair, it also risks breaching anti-discrimination laws. Agents and lenders must ensure that humans have the final say, checking that automated decisions are consistent with ethical and legal obligations
Data Privacy in Smart Homes
AI in property is not only about finance. Increasingly, it’s inside the homes themselves. Smart devices such as voice assistants, connected appliances, and energy meters collect a constant stream of information about how residents live.
While this data can help optimise energy use or schedule maintenance, it also raises privacy concerns. The Office of the Australian Information Commissioner has made it clear that property managers and technology providers are still bound by the 1988 Privacy Act when handling tenant or homeowner data. That means clear consent, secure storage, and limits on data sharing are essential.
Imagine a scenario where a property manager could access real-time data on how often a tenant is home or how much electricity they use. Without strict boundaries, the risk of overreach is significant. In this case, transparency is critical. Residents should always know what data is collected, how it will be used, and who has access to it.
Regulation Is Catching Up
In 2024, the Australian Government issued its interim response to the Safe and Responsible AI in Australia discussion paper, signalling a shift toward mandatory guardrails for high-risk use cases. The response emphasised the need for greater transparency and accountability, particularly where consumer rights could be affected in areas like finance and housing. Alongside this, the government released a policy for the responsible use of AI in government and a national assurance framework to put these principles into practice.
Other jurisdictions are already moving ahead. The European Union’s AI Act, for instance, classifies applications such as tenant screening and mortgage lending as “high-risk,” requiring strict oversight. Australia is not there yet, but the direction is clear. Agencies adopting AI today should plan for tougher compliance obligations tomorrow.
Proactivity pays off. By demonstrating responsible AI practices now, agencies can build trust with clients, attract forward-thinking partners, and protect themselves from the reputational fallout of a privacy breach or discrimination claim. In a market built on credibility, that foresight can become a real competitive advantage.
Striking the Balance
It is easy to see AI as either a silver bullet or a looming threat, but the truth lies in between. AI can deliver enormous benefits: faster valuations, more efficient property management, and better sustainability reporting. However, it could just as easily undermine fairness and privacy in the industry.
So how should the real estate sector respond?
Audit your AI tools regularly. Understand what data they use, how decisions are made, and whether outcomes align with ethical and legal standards.
Keep humans in the loop. Use AI for efficiency but ensure a qualified professional signs off on critical decisions.
Be transparent with clients. Explain when AI is used, how results are generated, and what the limitations are.
Prepare for regulation. Build compliance processes now rather than waiting for the government to mandate them.
Responsible AI as a Competitive Advantage
AI is not going away. In fact, its role in real estate will only expand as agencies compete on efficiency, service, and insight. But the winners will not be those who simply deploy AI fastest. The winners will be those who use it responsibly.
By confronting bias, safeguarding privacy, and preparing for regulation, Australian real estate professionals can harness AI without losing public trust. In an industry built on relationships and credibility, that trust is the most valuable asset of all.
Responsible AI is about trust as much as technology. Learn more about how OFO Collective is building human-centred AI for Australia’s real estate industry.
