Channel 9 The Block 2011: Purchase, Reserve & Sale Prices, Renovation Costs, Rental Yields; Block houses expected to lose half a million dollars each. All four cottages bought by investors.
Tweet Topic Started: 22 Aug 2011, 09:43 AM (26,558 Views)
Just FYI - Channel 9 late news bulletin last night stated that a second property was sold after auction for the reserve price, but didn't catch which one?
For Aussie property bears, "denial", is not just a long river in North Africa.....
Just FYI - Channel 9 late news bulletin last night stated that a second property was sold after auction for the reserve price, but didn't catch which one?
The sisters Katrina & Amie, sold at reserve price of $860K after the auctions.
Wonder what a theoretical interest expense would have been if the money was borrowed at say 90% LVR?
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Wonder what a theoretical interest expense would have been if the money was borrowed at say 90% LVR?
It will be interesting as well if there is data on how much the total net revenue + interest generated from the ads for this program, as the main revenue for free to air television is the advertising. They were charging around 10k - 50k per 30 seconds ads, it depends on the TV program.
No doubt Channel 9 will have made money from the the series (through advertising), but these results really show how dire the property market is. Channel 9 overpaid in the first place, and then overcapitalised. This mirrors what has been happening in the general public for the last decade. Many people are in for a rude awakening over the next decade as they realise their prized asset is worth a lot less than the money they spent on it.
Channel 9 may just have created the catalyst that finally crashes the property market. Melbourne real estate was already in serious trouble before this weekend's results, but this result will accelerate the crash process, now that the public are fully aware how bad things actually are out there. If I was a Melbourne property investor right now I'd be feeling very very worried.
The talk has already begun about ‘what this means for the market’ and ‘this is evidence prices have crashed’ after only one in four properties sold on The Block's finale last night.
So what went wrong? The promotion was fantastic, the preparation was spot on, the location desirable and the bidders were prepared to bid.
In reality the result demonstrates how much power buyers wield in the current market conditions, how easy it is to get caught up in the hype believing buyers will foolishly pay a premium, and the importance of the agent being able to prepare the seller to face reality.
The latter is the real reason the properties did not sell.
Despite the fact that the agents were raided by the Office of Fair Trading just before the auctions because of suspected ‘low balling’ (a term used to describe under-quoting by agents), it appears the agent estimates were spot on.
The real problem with The Block, I believe, was that the agents were not able to talk to the real sellers.
The participants in the show were not the decision-makers. The real sellers were the producers who set the reserves and I suspect, because they were not exposed to the real market feedback, the reserves were too high.
The marketing attracted the buyers, they turned up in their thousands to the opens, they expressed interest and they were bidding.
I recall people saying during the campaign that they thought the properties would sell for $1 million to $1.1 million. Where were they at the auction?
This happens all the time and the uneducated get caught up in the hype believing their property will defy all the odds and achieve the impossible. Sometimes it does happen but not in a buyers' market.
According to this, The Block had 2 million viewers for the penultimate episode, so it was probably more for the auction episode. That's a fair chunk of the Aussie population who now know that house prices don't always go up.
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