I first discussed this issue publicly in a news.com.au article, after being invited to comment on AI-edited real estate images. Since then, the question of the right test for AI-edited property advertising has come up repeatedly across public forums. This piece sets out in more detail how the consumer law applies.
AI in real estate advertising is already regulated
When AI generated images started turning up in property listings, the reaction was loud and mostly the same. This should be illegal. There ought to be a law against it.
New AI specific laws may well be coming, but that does not mean AI use in advertising is currently unregulated. It is already governed by consumer law that has been settled for decades.
The law is about impressions, not technology
Under the Australian Consumer Law, advertising must not be misleading or deceptive. The law is interested in whether the advertisement, taken as a whole, gives a misleading impression of the property. That covers the words, the images, the medium and any relevant disclaimers, rather than the means by which the ad was created or “how much” AI was used.
That is the key point. For the purposes of the consumer law, the legal question is not whether an image was created by AI, or whether a photograph was edited, or whether a particular technique is new. The question is what the advertisement communicates to the audience who sees it.
That matters because advertising can mislead by impression. An advertisement may create a misleading impression through context, presentation, emphasis or omission even where every individual statement is technically true. In a property listing, that can include what the images show, what they imply, and what they leave the viewer to assume.
Rather than creating a gap in the law, AI has simply found a vivid new way of running into a rule that was already there.
The test is objective
The test is objective, not subjective. It does not turn on whether a particular buyer felt deceived, and a person cannot simply say they were misled and treat that as the end of the matter.
The question is what impression would be formed by an ordinary member of the relevant audience, considering the advertisement as a whole. That is why the same image might be assessed differently depending on the context in which it appears and the audience to whom it is directed.
Intention is not the test
It doesn’t matter what the agent intended. An agent might genuinely believe an image was harmless, useful or merely illustrative. That is not the question. The law is concerned with the impression the advertisement conveys, not the state of mind of the person who created it.
Where the line falls is not yet settled
People want a precise answer about what is allowed, and we do not have one yet. The prohibition on misleading conduct is broad, and it only acquires concrete meaning for AI in real estate once courts apply it to actual cases. Until courts apply these principles to actual AI-generated property advertisements, we cannot say exactly where the line will fall.
In the meantime, the purpose of a property advertisement gives us a useful guide. It exists to help a prospective buyer decide whether this particular property is worth pursuing. Edits that alter the apparent characteristics of the property itself are therefore more likely to create risk than changes that merely improve presentation at a superficial level. Making a room appear larger than it is, creating a view that does not exist, removing physical features, or changing the apparent layout of a property goes to the substance of what is being offered. By contrast, adding furniture, improving lighting, or showing a clearly labelled visualisation of how a room might be styled is less likely to affect the buyer’s impression of the property itself.
The closer an image gets to changing what the property appears to be, the harder it becomes to treat it as harmless presentation, and the more likely it is that the advertisement as a whole will be found misleading.
Why disclaimers may not solve the problem
Property advertising has long relied on disclaimers. Artist’s impressions, digitally enhanced images and lifestyle imagery have often been accompanied by qualifications explaining that what is shown may not precisely reflect reality.
A disclaimer may be relevant to whether an advertisement is misleading, but it is only one part of the overall picture, and it does not settle the question on its own. For some kinds of editing it is enough. A note that furniture has been added, or that an image shows a styling suggestion, sits comfortably alongside what the buyer sees, and the impression and the qualification do not pull hard against each other. The trouble comes with images that are realistic and persuasive enough to lodge an impression of their own. If an image convinces a buyer that the property is a certain way, a disclaimer appearing elsewhere may not undo what the image has already done.
The underlying problem is not really about disclaimers at all; it is the assumption that a subsequent correction can always neutralise an inaccurate impression. The relevance of the inspection raises the same considerations. Seeing the property in person is a chance to revise a first impression, but it is not a complete answer to the risk posed by an edited image. Why not? Because people are not purely rational. An impression is built from thoughts, impulses and emotion as much as from reason, and once one has taken root it is not easily dislodged by the facts that arrive later.
This becomes more significant as AI improves. An obvious artist’s impression may be understood by consumers as exactly that: an illustration. A photorealistic AI image is capable of doing something different. It can present itself as a depiction of reality while in fact showing something that does not exist.
Whether a particular disclaimer is sufficient will depend on the circumstances. But the mere presence of words such as ‘artist’s impression’, ‘digitally enhanced’ or ‘AI-generated’ does not automatically answer the legal question. All of it comes back to impression: what would an ordinary prospective buyer or renter take from the advertisement as a whole?
Why this may change faster than the law
All of this moves slowly, and enforcement lags behind the conduct. While everyone is using these tools, the practice becomes the competitive standard, and it will be treated as legitimate until it is clearly found not to be. There is unlikely to be enough pressure from within the industry to stop it.
The public response has been another matter, and it has been faster and sharper than the law. Agents have flattered properties with wide lenses and careful editing for years, and legally AI is more of the same. But the scale is new. Earlier techniques enhanced reality. AI can generate reality. People already suspect these tools of manipulating them, and in a market this punishing the feeling is hard to untangle: pulled in by an image you wanted to believe, then angry at being worked, and angrier still for having hoped at all. In the near term, that reaction will likely do more to change agent behaviour than enforcement action.
The practical position
For buyers and renters: the danger is that an exciting image commits you before you arrive, and that commitment is hard to shake once you are in the room. So do not commit on the basis of images alone. Compare the photos against the listed dimensions and against the other images, not just the hero shot. Ask the agent directly whether any images have been enhanced or generated. The answer tells you something either way.
For agents: the tool is not the problem. A clearly labelled AI visualisation can be genuinely useful. The problem is presenting something that is not real as though it were, where a buyer reads it as fact. If a reasonable person would take a materially false impression from what you have published, the law is already engaged, whatever made the image. Show what is real, label what is not.
This article is general information about how the Australian Consumer Law applies to property advertising. It is not legal advice and does not address any particular advertisement, agency, or matter. If you are concerned about a specific listing, or about your obligations as an agent, you should obtain advice on your circumstances.
