The Block 2012 properties sold for around $100,000 above estimates, reflecting improved consumer sentiment from last year: Frank Valentic
The Block auctions in 2012 are now over, and we congratulate all the contestants on their big financial windfalls. From Dale and Sophie ($355,000), Mike and Andrew ($434,000), Dani and Dan ($448,000) and the overall winners Brad and Lara ($606,000), the total combined profit was $1,843,000, working out to be an average of $466,000 each.
You would be disappointed if you were last year’s contestants, who combined won less than any of this year’s contestants, with total winnings of only $225,000. That’s a total difference of $1,618,000 or 719% increase. No wonder this year’s contestants were crying with joy! Unfortunately there were no bargains to be had this year, unlike our purchase of Polly and Waz’s house last year for $858,000 for one of our investor clients. With a fantastic rental of $995 per week and an extra $30,000 per annum in depreciation, this represented great buying.
I and other real estate professionals believed that Brad and Lara’s house would set the benchmark, as it was estimated to be worth at least $200,000 more than the other homes. This was based on the land size, which was 21% larger (158 square metres) and 44% wider (7.91 metres). I estimated that it would sell for $1,510,000 based on many recent comparable sales in the area. One recent example is an inferior townhouse at 3/297 Dorcas Street, South Melbourne (land size 113 square metres, 46 square metres smaller in land, two metres narrower frontage), which sold for $1,500,000 two weekends ago.
We were bidding for a female home buyer for Brad and Lara’s property with a budget of $1,380,000 and unfortunately were blown away by at least six bidders and an eventual sale price of $1,620,000. Our client was disappointed we were $240,000 short as she had already missed out on two properties on her own in the South Melbourne area. Karl Gillion from Buxton Real Estate did a textbook auction and made sure he got every last dollar out of the remaining buyers.
My predictions were then revised upwards to around $1.4 million for the remaining properties. We had an investor client who was keen to snag a bargain (around the $1,050,000 mark) for the next two auctions, but we didn’t even get a bid in with six to seven bidders taking Dan and Dani’s property to $1.44 million and Dale and Sophie’s to $1.33 million.
The last auction was the most talked about with the branded T-shirt guy (not going to give them any more publicity!) who had three other staff at the auctions in branded T-shirts and was bidding in ridiculous dollar and cents amounts. I was bidding for another investor who was attracted to the quality of Mike and Andrew’s property and in particular, their backyard. She was attracted to the potential rental return (about $1,100 to $1,200 per week fully furnished plus about $700 to $800 per week in tax depreciation) totalling around $1,800 to $2,000 per week or around 7% gross return.
I have bid at over a thousand auctions over the last 17 years and as a buyers’ advocate / buyers’ agent, I have attended many other auctions each weekend and I have never been involved in an auction as bizarre as this where a bidder bids in uneven increments, including cents with every bid. The auctioneer, Andrew Stuart of Hocking Stuart, did a good job trying to work out his bids, but I am surprised he accepted the uneven bids. In a normal auction, the auctioneer would round the amount up and only drop the bidding in set increments. The backlash to this crazy bidding has started an online frenzy of annoyed viewers.
We stuck to our client’s pre-budget limit of $1.4, which would have delivered a healthy return of approximately 7%, and it was awarded to Mr T-shirt man for $1,401,001.01.
What The Block 2012 result means for the property market
This year’s market conditions have improved, with five interest rate cuts starting to flow through to the marketplace and investors coming back into the market.
These properties were perceived as superior to last year’s due to their South Melbourne location on the border of Albert Park and the third-level “wow factor” of uninterrupted city views.
Melbourne’s property market is segmented, and you can’t generalise about all properties and put them in one basket. Renovated, well-located period houses are always in more demand than other property types, and these properties had all the “bells and whistles” apart from the compromises surrounding off-street parking and being on a through road.
The properties were purchased on average for $1,445,000, well above South Melbourne’s median ($967,000) and Albert Park’s median (1.29 million), and they were superior to many median price single-level houses in the area. I estimated that 405 (Brad and Lara) would sell for $1.51 million and the others between $1.3 million and $1.35 million. Based on this, they all sold for around $100,000 more than estimated market value.
History was made with online bidding used for the first time at a Melbourne auction. The flurry of live bids meant that only two online bids were called, and they were both $200,000 to $250,000 below where the live bids were at. I don’t think this is the way of the future for the Melbourne property market, as the online bidding cannot keep up with the pace of a live auction. I believe the buyers would have been better placed to use a buyers’ agent / buyers’ advocate to do the bidding for them or use an agent to take phone bids.
Reserves were set ridiculously low (at least $200,000 to $300,000 below most agents’ estimates) and much lower in comparison to last year’s reserves. No vendor bids were needed at any of the auctions.
Executive producer of Channel 9 Julian Cress got the mix right with low reserves and “onsite” auctions rather than the town hall auction room atmosphere last year.
There was a mix of home buyers and investors this year, whereas last year’s properties attracted mainly investors.
Consumer sentiment has improved considerably since last year, and l would doubt these properties would have achieved these prices in last year’s market, if auctioned at the same time as the Richmond auctions.
In summary our second Block auction experience was very different to our first, and our clients were disappointed to miss out, although they understand how important it is to stick to their set budgets.
The show continues to have a successful formula and attracted great support from millions of viewers. We enjoyed watching the series and enjoyed being a part of the experience, and it’s great to see some positive headlines in the press regarding the Melbourne property market this time. The great Australian dream of owning a beautiful house continues to appeal to viewers and this year resulted in great results for Channel 9, the contestants and the successful purchasers.
Frank Valentic is managing director of Advantage Property Consulting.The Block auctions in 2012 are now over, and we congratulate all the contestants on their big financial windfalls. From Dale and Sophie ($355,000), Mike and Andrew ($434,000), Dani and Dan ($448,000) and the overall winners Brad and Lara ($606,000), the total combined profit was $1,843,000, working out to be an average of $466,000 each.
You would be disappointed if you were last year’s contestants, who combined won less than any of this year’s contestants, with total winnings of only $225,000. That’s a total difference of $1,618,000 or 719% increase. No wonder this year’s contestants were crying with joy! Unfortunately there were no bargains to be had this year, unlike our purchase of Polly and Waz’s house last year for $858,000 for one of our investor clients. With a fantastic rental of $995 per week and an extra $30,000 per annum in depreciation, this represented great buying.
I and other real estate professionals believed that Brad and Lara’s house would set the benchmark, as it was estimated to be worth at least $200,000 more than the other homes. This was based on the land size, which was 21% larger (158 square metres) and 44% wider (7.91 metres). I estimated that it would sell for $1,510,000 based on many recent comparable sales in the area. One recent example is an inferior townhouse at 3/297 Dorcas Street, South Melbourne (land size 113 square metres, 46 square metres smaller in land, two metres narrower frontage), which sold for $1,500,000 two weekends ago.
We were bidding for a female home buyer for Brad and Lara’s property with a budget of $1,380,000 and unfortunately were blown away by at least six bidders and an eventual sale price of $1,620,000. Our client was disappointed we were $240,000 short as she had already missed out on two properties on her own in the South Melbourne area. Karl Gillion from Buxton Real Estate did a textbook auction and made sure he got every last dollar out of the remaining buyers.
My predictions were then revised upwards to around $1.4 million for the remaining properties. We had an investor client who was keen to snag a bargain (around the $1,050,000 mark) for the next two auctions, but we didn’t even get a bid in with six to seven bidders taking Dan and Dani’s property to $1.44 million and Dale and Sophie’s to $1.33 million.
The last auction was the most talked about with the branded T-shirt guy (not going to give them any more publicity!) who had three other staff at the auctions in branded T-shirts and was bidding in ridiculous dollar and cents amounts. I was bidding for another investor who was attracted to the quality of Mike and Andrew’s property and in particular, their backyard. She was attracted to the potential rental return (about $1,100 to $1,200 per week fully furnished plus about $700 to $800 per week in tax depreciation) totalling around $1,800 to $2,000 per week or around 7% gross return.
I have bid at over a thousand auctions over the last 17 years and as a buyers’ advocate / buyers’ agent, I have attended many other auctions each weekend and I have never been involved in an auction as bizarre as this where a bidder bids in uneven increments, including cents with every bid. The auctioneer, Andrew Stuart of Hocking Stuart, did a good job trying to work out his bids, but I am surprised he accepted the uneven bids. In a normal auction, the auctioneer would round the amount up and only drop the bidding in set increments. The backlash to this crazy bidding has started an online frenzy of annoyed viewers.
We stuck to our client’s pre-budget limit of $1.4, which would have delivered a healthy return of approximately 7%, and it was awarded to Mr T-shirt man for $1,401,001.01
What The Block 2012 result means for the property market
This year’s market conditions have improved, with five interest rate cuts starting to flow through to the marketplace and investors coming back into the market.
These properties were perceived as superior to last year’s due to their South Melbourne location on the border of Albert Park and the third-level “wow factor” of uninterrupted city views.
Melbourne’s property market is segmented, and you can’t generalise about all properties and put them in one basket. Renovated, well-located period houses are always in more demand than other property types, and these properties had all the “bells and whistles” apart from the compromises surrounding off-street parking and being on a through road.
The properties were purchased on average for $1,445,000, well above South Melbourne’s median ($967,000) and Albert Park’s median (1.29 million), and they were superior to many median price single-level houses in the area. I estimated that 405 (Brad and Lara) would sell for $1.51 million and the others between $1.3 million and $1.35 million. Based on this, they all sold for around $100,000 more than estimated market value.
History was made with online bidding used for the first time at a Melbourne auction. The flurry of live bids meant that only two online bids were called, and they were both $200,000 to $250,000 below where the live bids were at. I don’t think this is the way of the future for the Melbourne property market, as the online bidding cannot keep up with the pace of a live auction. I believe the buyers would have been better placed to use a buyers’ agent / buyers’ advocate to do the bidding for them or use an agent to take phone bids.
Reserves were set ridiculously low (at least $200,000 to $300,000 below most agents’ estimates) and much lower in comparison to last year’s reserves. No vendor bids were needed at any of the auctions.
Executive producer of Channel 9 Julian Cress got the mix right with low reserves and “onsite” auctions rather than the town hall auction room atmosphere last year.
There was a mix of home buyers and investors this year, whereas last year’s properties attracted mainly investors.
Consumer sentiment has improved considerably since last year, and l would doubt these properties would have achieved these prices in last year’s market, if auctioned at the same time as the Richmond auctions.
In summary our second Block auction experience was very different to our first, and our clients were disappointed to miss out, although they understand how important it is to stick to their set budgets.
The show continues to have a successful formula and attracted great support from millions of viewers. We enjoyed watching the series and enjoyed being a part of the experience, and it’s great to see some positive headlines in the press regarding the Melbourne property market this time. The great Australian dream of owning a beautiful house continues to appeal to viewers and this year resulted in great results for Channel 9, the contestants and the successful purchasers.
