Artificial intelligence is transforming property advertising across Australia, allowing agents to furnish empty rooms, enhance interiors and digitally alter photographs with remarkable ease. However, as the technology becomes increasingly sophisticated, questions are emerging about the distinction between creative marketing and misleading advertising.  

With Queensland issuing industry guidance and NSW introducing new disclosure requirements, the use of AI-generated property images is attracting greater regulatory attention. 

Artificial intelligence has rapidly become a valuable tool in real estate marketing, offering agents the ability to present properties in ways that would previously have required considerable time, expense and professional expertise. Empty rooms can be digitally furnished, interiors enhanced and outdoor spaces transformed, often within seconds. While these developments present opportunities for agents to showcase a property's potential, they also raise questions about the accuracy of the images being presented to prospective buyers and tenants. 

The issue has attracted growing attention across Australia, particularly as increasingly sophisticated editing tools make it difficult to distinguish between genuine photographs and digitally generated content. In October 2026, ABC News reported on the use of artificial intelligence in Australian property listings, highlighting examples of digitally altered interiors, virtual furniture and computer-generated people appearing in real estate advertisements. 

The practice of presenting properties through heavily enhanced or misleading images has even acquired its own informal term, housefishing. Although the terminology is relatively new, the underlying concern is not. Real estate advertising has always been subject to laws designed to prevent consumers from being misled about the properties they are considering purchasing or renting. 

As AI becomes more widely adopted throughout the industry, agents must consider whether their use of digital enhancements remains consistent with those obligations. 

Is it legal to use AI-generated property photographs in Australia? 

The use of AI-generated property photographs and virtual staging is not automatically prohibited in Australia. However, agents must ensure that their advertising complies with Australian Consumer Law, which prohibits misleading or deceptive conduct in trade or commerce. 

These obligations apply nationally, regardless of whether a property is being advertised in New South Wales, Victoria, Queensland, Western Australia or another jurisdiction. The Australian Competition and Consumer Commission (ACCC) makes it clear that real estate agents must provide accurate information about properties and must not create misleading impressions about their features, condition or characteristics. 

Importantly, an advertisement may be considered misleading even where there was no intention to deceive. What matters is the overall impression conveyed to the consumer and whether the information presented could lead them to form an inaccurate understanding of the property. 

These principles apply equally to traditional photography, digitally enhanced images and photographs generated or modified using artificial intelligence. The method used to create an image does not remove the obligation to ensure that the finished advertisement accurately represents the property. 

Where does virtual staging end and misleading advertising begin? 

Virtual staging has become an increasingly popular alternative to traditional property styling, particularly for vacant properties. By digitally adding furniture, artwork and decorative elements, agents can demonstrate how a space might be used without incurring the costs associated with physically furnishing it. 

When undertaken responsibly, virtual staging can provide prospective buyers and tenants with a useful indication of a property's potential. However, there is an important distinction between illustrating how a room could be furnished and altering the characteristics of the room itself. 

For example, digitally adding a dining table to an empty living area may help prospective buyers understand how the space could function. By contrast, digitally enlarging the room, removing structural defects or altering the position of windows could create a misleading impression of the property's dimensions or condition. 

Modern AI tools are capable of making such alterations with remarkable accuracy. They can remove neighbouring buildings, replace damaged surfaces, introduce landscaping and generate features that do not exist. Although these capabilities offer considerable creative flexibility, they also increase the risk that an advertisement may present a version of the property that differs materially from reality. 

The following examples illustrate some of the distinctions agents should consider when using digitally altered photographs. 

These examples are intended as practical guidance rather than definitive legal assessments. The central consideration is whether the final advertisement provides an accurate representation of the property and whether any alterations could materially influence a prospective buyer's or tenant's understanding of what is being offered. 

Queensland reinforces the importance of responsible digital enhancement 

The use of digitally altered property photographs has already attracted regulatory attention outside New South Wales. In June 2026, Queensland's Office of Fair Trading released guidance encouraging agents to use digital enhancements responsibly and to disclose AI-generated content where appropriate. 

The guidance followed concerns about the increasing use of image manipulation in property advertising, including alterations that could misrepresent a property's condition or features. 

One example highlighted by the regulator involved a property advertised with a sparkling blue swimming pool. When prospective buyers inspected the property, they reportedly discovered that the pool was in poor condition, with murky water and a damaged shade sail. The discrepancy between the advertisement and the property's actual appearance demonstrated how digital enhancements can create unrealistic expectations. 

For Queensland agents, the guidance reinforces existing obligations under Australian Consumer Law and relevant state legislation. More broadly, it illustrates that the responsible use of AI-generated property imagery is an industry-wide consideration rather than an issue confined to a single jurisdiction. 

NSW introduces new disclosure requirements for AI-generated rental advertisements 

While Queensland has emphasised existing advertising obligations, New South Wales has taken a further step by introducing specific legislative requirements addressing misleading digitally altered rental advertisements. 

On Thursday the 24th of September 2026, the NSW Parliament passed the Residential Tenancies (Protection of Personal Information) Amendment Bill 2025. The legislation introduces a range of protections for renters, including measures relating to personal information, rental applications and digitally altered property advertising. 

In its announcement on Friday the 25th of September, the NSW Government confirmed that landlords and agents would be required to disclose certain digitally altered or AI-generated images used in rental advertisements where those alterations conceal faults or mislead prospective tenants. 

The Government specifically identified the use of digitally generated furniture to conceal structural damage and alterations that misrepresent room proportions as examples of the conduct the reforms are intended to address. 

Businesses that fail to comply with the new disclosure requirements could face penalties of up to $22,000. The changes are expected to commence in early 2027, with further implementation details to be confirmed. 

Importantly, the reforms do not prohibit the use of artificial intelligence or virtual staging in rental advertisements. Rather, they introduce additional transparency requirements intended to prevent prospective tenants from being misled about a property's characteristics or condition. 

Although these new provisions relate specifically to residential rental advertising in NSW, existing Australian Consumer Law obligations continue to apply to property sales and rentals throughout Australia. 

Is a virtual staging disclaimer sufficient? 

Clearly identifying a photograph as virtually staged can help prospective buyers and tenants understand that certain elements have been digitally added or modified. However, a disclaimer does not automatically make an otherwise misleading advertisement compliant. 

Consider a photograph of a vacant bedroom that has been digitally furnished. If the furniture has been added without altering the room's dimensions or physical characteristics, the image may provide a useful illustration of how the space could be used. However, if the editing process has also enlarged the room or altered the proportions of the furniture to create an impression of greater space, a general virtual staging disclaimer may not adequately address the misleading representation. 

Similarly, identifying a photograph as digitally enhanced does not necessarily alert consumers to the removal of structural defects, water damage or other material characteristics. 

Agents should therefore consider both the nature of the alterations and the overall impression created by the finished image. Where virtual staging is used, clearly identifying the altered photographs and retaining original images can help demonstrate transparency and provide a reliable record of the property's actual appearance. 

Who is responsible when property photographs are edited externally? 

Many real estate agencies rely on external photographers, marketing contractors and specialist editing services to produce their advertising materials. As AI-powered tools become more widely available, substantial alterations may be made during the editing process without the agent necessarily being aware of every change. 

A photographer may capture the original images, an editing service may enhance them and a marketing coordinator may upload the finished photographs before the listing is approved. Without a clear review process, it is possible for misleading alterations to go unnoticed. 

For agency principals and Licensees in Charge, this raises important questions about supervision and advertising approval procedures. Outsourcing the production of marketing material does not remove the need for appropriate oversight, particularly where an agency is responsible for publishing the finished advertisement. 

Agencies should consider establishing clear expectations for external suppliers regarding permissible alterations, retaining original photographs and ensuring that someone familiar with the property reviews the final images before publication. 

These procedures need not be unnecessarily complicated. However, they should provide reasonable assurance that published photographs accurately represent the properties being advertised. 

Five practical considerations for Australian real estate agencies 

As AI-generated imagery becomes increasingly common, agencies should consider whether their existing marketing procedures adequately address the risks associated with digital alterations. 

1. Accuracy of representation. Ensure that digitally altered photographs accurately reflect the property's dimensions, condition, features and surroundings. Enhancements should not create an unrealistic impression of what prospective buyers or tenants will find during an inspection. 

2. Concealment of defects. Review images to determine whether any alterations have removed or obscured damage, structural concerns or other characteristics that could influence a consumer's decision. 

3. Disclosure of digital alterations. Where virtual staging or substantial image modifications have been used, consider whether clear disclosure is necessary to prevent confusion or misunderstanding. Agencies should also remain aware of any additional requirements applying in their jurisdiction. 

4. Retention of original photographs. Maintaining copies of unaltered images provides a useful reference and allows agencies to identify changes made during the editing process. 

5. Approval and supervision. Establish responsibility for reviewing advertising material before publication, particularly where photographs have been produced or modified by external providers. 

For agencies operating across multiple states and territories, a consistent internal approach to AI-generated imagery may also help manage differences between local advertising requirements. 

Will other Australian states introduce similar requirements? 

The developments in Queensland and NSW demonstrate that regulators are paying closer attention to the use of artificial intelligence in property advertising. However, there is currently no single national requirement for every AI-generated real estate photograph to carry a specific disclosure label. 

Australian Consumer Law already establishes obligations against misleading advertising, while individual states and territories may impose additional requirements through their property legislation and professional conduct rules. 

Whether other jurisdictions introduce disclosure provisions similar to those announced in NSW remains to be seen. Nevertheless, the increasing sophistication and accessibility of AI editing tools suggest that transparency in property marketing will remain an important consideration for the industry. 

For agents, the most practical approach is to ensure that digital enhancements are used responsibly, that advertising accurately represents the property and that appropriate approval procedures are maintained. 

Frequently asked questions about AI-generated property photographs 

Can real estate agents use AI-generated property photographs in Australia? 

Yes. AI-generated property photographs and virtual staging are not automatically prohibited in Australia. However, advertisements must comply with Australian Consumer Law and must not mislead prospective buyers or tenants about a property's features, condition or characteristics. 

Is virtual staging legal in Australia? 

Virtual staging is generally permissible where it does not create a misleading impression of the property. Agents should consider clearly identifying digitally staged images and ensuring that alterations do not misrepresent the property's dimensions or physical characteristics. 

Do real estate agents have to disclose AI-generated photographs? 

Disclosure requirements depend on the jurisdiction and circumstances. NSW has passed legislation introducing additional requirements for certain misleading digitally altered rental advertisements, with commencement expected in early 2027. Existing consumer protection obligations apply nationally. 

Can agents use AI to remove defects from property photographs? 

Digitally removing mould, cracks, water damage or other defects may create a misleading impression of the property's condition. Such alterations could expose an agency to compliance risks under existing consumer protection legislation. 

What is housefishing in real estate? 

Housefishing is an informal term used to describe property advertising that relies on heavily enhanced or digitally altered images to create an unrealistic impression of a property's appearance, features or condition. 

What are the penalties for misleading AI-generated rental advertisements in NSW? 

The NSW Government has announced penalties of up to $22,000 for businesses that fail to comply with the new disclosure requirements relating to misleading digitally altered rental photographs, once the relevant provisions commence. Existing consumer protection laws may also apply to misleading advertising. 

The picture might be perfect, but the property still needs to be real 

Artificial intelligence offers considerable opportunities for real estate marketing, allowing agents to present properties creatively, demonstrate potential layouts and produce compelling advertising without the expense associated with traditional styling. 

However, the increasing sophistication of digital editing tools also creates greater responsibility for those producing and approving property advertisements. The developments in Queensland and NSW demonstrate that regulators are becoming increasingly attentive to the potential for AI-generated imagery to mislead consumers. 

For real estate professionals across Australia, the underlying principle remains straightforward. Technology can be used to present a property at its best, but the resulting advertisement must accurately represent what prospective buyers and tenants can reasonably expect to find. 

Ultimately, successful property marketing should attract attention without compromising trust. Artificial intelligence may help people imagine what a property could become, but it should never mislead them about what they are actually being offered. 

Sources and further reading 

• Australian Competition and Consumer Commission (ACCC): Real estate advertising and consumer protection. 

• NSW Government: Minns Labor Government delivers NSW renters landmark protections against privacy breaches and misleading rental ads, Friday the 25th of September 2026. 

• NSW Fair Trading: Advertising guidelines for property agents. 

• ABC News: Reporting on the use of artificial intelligence in Australian real estate advertising, October 2026. 

• Queensland Office of Fair Trading: Guidance on responsible digital enhancement in property advertising, June 2026. 

This article provides general information about AI-generated property advertising and relevant Australian consumer protection obligations. State and territory requirements may differ. The NSW rental advertising reforms are expected to commence in early 2027, subject to confirmation of the commencement date and implementation details.