It’s certainly a conversation topic amongst buyers and sellers every time the auctions are conducted and from the turnout at the open homes in Melbourne and from the number of viewers that watch the show religiously, it certainly doesn’t seem to be losing its’ appeal.
So how did the results fare so well for the temporary owners of the apartments when the Melbourne property market is on one of the sharpest downward turns in many years?
In case you didn’t catch the final episode, the auction results were as follows…
- Auction 1: Reserve Price = $2,650,000 Sales Price = $2,859,000 Profit = $209,000 (figure sold above reserve price)
- Auction 2: Reserve Price = $2,690,000 Sales Price = $2,991,000 Profit = $301,000 (figure sold above reserve price)
- Auction 3: Reserve Price = $2,360,000 Sales Price = $2,770,000 Profit = $410,000 (figure sold above reserve price)
- Auction 4: Reserve Price = $2,435,000 Sales Price = $2,850,000 Profit = $415,000 (figure sold above reserve price)
- Auction 5: Reserve Price = $2,475,000 Sales Price = $3,020,000 Profit = $545,000 (figure sold above reserve price) + $100,000 for winning the show
So, if you add you add these figures up, the total reserve prices were $12,610,000 and the total selling prices were $14,490,000.
This equates to an average of almost 15% above the reserve price…which is a particularly outstanding result (with the lowest being just under 8% above the reserve price and the highest being more than 22% above the reserve price).
To put this into context, I’ve researched the past 100 auction results I can find in Brisbane and only 4 out of the past 100 recent auctions achieved a figure that was at least 8% higher than the reserve price…and none of them at all reached a figure of 22% above reserve price.
Keep in mind that our property market is currently in far better shape than the Melbourne market too.
The other factor to consider is that the ‘Gatwick Hotel’ (the original dilapidated building that was transformed into these 5 apartments) was apparently sold for $10 million to the stakeholder behind this TV show.
As discussed above, the total selling prices were $14,490,000…a figure that was almost $4.5 million higher than they paid for the building.
I’ve asked a number of well-qualified friends of mine that are in the building industry what sort of costs would have been incurred in the renovation of this grand old hotel…and the estimations ranged from $5 million to $8 million.
If these estimations were accurate, this means the project would have lost anywhere from $500,000 to $3.5 million…and that’s not considering Stamp Duty, agent’s commissions, holding costs, marketing costs, development applications and anything else that may have arisen.
In summation, it would be fair to say that the reserve prices of $12,610,000 was pretty farcical and were set at figures that were more about gripping TV drama than profit.
Interestingly enough, agents are increasingly under pressure for ‘under-quoting’ (and this is very much under the spotlight in Melbourne right now) so there’s a strong argument that any selling price that was 22% above the reserve price would be bordering on illegality and could attract heavy fines to the agency involved…although I’m sure that the agents have little to do with the figures that were set here and ‘Fair Trading’ in Victoria would have turned a ‘blind eye’ to these results.
Finally, there is one factor that is of note…particularly if you are renovating.
The judges might brand some of the renovations as ‘bland’ or ‘boring’ but be rest assured, when you renovate to sell, you want to appeal to the widest variety of buyers you possibly can so some ‘slightly unusual’ tastes, colour schemes and décor may not necessarily be the best way to achieve the highest prices in real life.
Things like the ‘golden bath’ may have worked on the show but in real life, this has the potential to polarise buyers and may not necessarily be a good idea!
So, there you have it…our summation of ‘The Block 2018’.
We’re sure that next year’s season will bring more of the same when the ratings continue to soar.
Until next week…Happy Listing & Happy Selling!