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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.
Topic Started: 22 Aug 2011, 09:43 AM (26,557 Views)
Lefty
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The network may make it's money from advertising rather than the sale of houses, but as an advertisment for the property industry - which is what the show is meant to be - it could not be described as anything other than a dismal failure.

With perhaps 2 million people watching the final episode, the effect on mass sentiment should probably no be underestimated.
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nuff_ced
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One thing I found to be odd was the large TV screen at the front of the stage broadcasting the Contestants/Vendors sitting backstage with the host. Every time there was a bid one couple would jump up and down all excited like crazed lunatics. Who wants to dig into their pockets for another 10k to hand over to these ‘celebrities’ to dance around right in joy in front of your face? But Hey that’s just me.

There is a reason why Vendors usually wait indoors listening to the bidding going on outdoors. Actually I wonder how auctions would go if the vendors were standing up there with the auctioneer for everyone to see?
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Sunder
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jrsnr
22 Aug 2011, 01:10 PM

This is a fascinating result. Something like six months ago the market valued 37, 39, 41, and 43 Cameron Street at $950k each.

After placing $400k of renovations into these 'raw' units the current market values the properties at what? $900k maximum final bid.

So this basically means that the market for these properties now values them at maximum $500k raw unit price + $400k renovations.

This is a mind-blowing 47% fall in the raw unit price in 6 months!
That's a very bearish way of looking at it.

More likely they just over-capitalized, and the renovations were worth close to nothing, while the houses are worth roughly the same or a little less.
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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mugshot
22 Aug 2011, 09:52 AM
And from the same thread



Does that mean ALL the vendors took a bath? Cost $950K each and they couldn't even sell them for $850K? Ouch!
Might be a mistake there as 198,000 stamp duty is for 2.85m ... Still a loss even with $762,000 original sale price ... Who paid for the work?
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Sydneyite
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jrsnr
22 Aug 2011, 01:10 PM

This is a fascinating result. Something like six months ago the market valued 37, 39, 41, and 43 Cameron Street at $950k each.

After placing $400k of renovations into these 'raw' units the current market values the properties at what? $900k maximum final bid.

So this basically means that the market for these properties now values them at maximum $500k raw unit price + $400k renovations.

This is a mind-blowing 47% fall in the raw unit price in 6 months!
The market did not value these places at $950k each, the market valued them at $712.5k each (on average), as they passed in at auction for $2.85M.

I am still dubious as to this $3.6M figure being touted as the amount the shows producers supposedly paid, as it seems to be based on a stamp duty number from an un-disclosed source, which could well be wrong, and seems wrong given the public auction result, both before and after the reno's. $900k per un-renovated property in that part of Melbourne just seems ridiculous. You would get better value in the eastern suburbs or lower north shore Sydney easily.

Even if you accept the $3.6M figure that makes the average "market" value 6 months ago $900k, not $950k, as stamp duty is not a part of market value (unless you want to add it on to the realised sale prices as well).

EDIT: Aha! The plot thickens - according to this article (http://www.smh.com.au/entertainment/tv-and-radio/i-dont-sell-bargains-agents-defend-the-block-results-20110822-1j5uk.html) the $3.6M figure now includes stamp duty, making average purchase price $850k, which would still be way too much IMO given the state of the properties......



Edited by Sydneyite, 22 Aug 2011, 02:33 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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matthew_50
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Sunder
22 Aug 2011, 01:51 PM
That's a very bearish way of looking at it.

More likely they just over-capitalized, and the renovations were worth close to nothing, while the houses are worth roughly the same or a little less.
are you crazy!? over-capitalized? its not like they were updating 2 year old renovations... MOST OF THE HOUSES WERE MISSING WALLS!!! they were near demolished!!

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Admin
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Quote:
 
'I don't sell bargains': Agents defend The Block results

Karl Quinn
August 22, 2011 - 12:18PM

The Block may have fizzled in real estate terms, with only one house sold during Saturday night’s group auction, but it delivered in spades for Nine as the "winner announced" segment drew more than 3 million viewers.

The final 15 minutes of last night’s two-hour broadcast were watched by 3.09 million viewers in the five mainland capital cities, making it the most-watched program of the year.

It has since emerged that a second house featured in the show sold for its reserve price moments after the disappointing auction in which three of the four houses renovated by contestants were passed in.

Read more: http://www.smh.com.au/entertainment/tv-and-radio/i-dont-sell-bargains-agents-defend-the-block-results-20110822-1j5uk.html
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Frank Castle
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Business As Usual

Stupid example
Real people did not buy the sites, a network did
Shitty reno's were done, they were painting the exterior in the rain FFS
Only a fool would have bought them for the ask.

Smart money would have flattened the site and done a multi unit dev on it, if allowed
Not sure what a raw site in that area would be worth and couldnt be bothered looking.
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apex
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mugshot
22 Aug 2011, 12:17 PM
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.
Seems they had 3 million viewers for the auction.

3 million watch Block decision

How many houses sell in Australia each year? 400,000 I think? Oops, Nine just killed the property market.

Quote:
 
Nine claims top five shows between The Block finale and Underbelly: Razor debut.

Though the houses didn't sell, the show certainly did as the Nine Network recorded impressive ratings figures for all three of the shows that made up Sunday night's Block finale.

Over 3.089 million viewers tuned in for The Block 2011 – Winner Announced, which peaked at 3.428 million viewers, making it the top show of the night and the week.

The Block 2011 – Auction was second for the night averaging 2.690 million viewers and The Block – Grand Final came fourth with 2.282 million viewers.

Two up, the Underbelly: Razor premiere rated very highly with both episodes.

The numbers compare favourably with those for the MasterChef finale two weeks prior, where the equivalent episodes rated 2.568 million, 2.334 million and 1.810 million.

On that occassion The Block proved MasterChef's biggest competition, however the same could not be said for The Renovators last night as it rated a series low 407,000 to finish 20th on the night.

The premiere of Underbelly: Razor was also broken into two shows. Episode 1 achieved 2.510 million viewers, Episode 2 wasn’t far behind, with 2.089 million viewers, to come third and fifth on the night respectively.

Unsurprisingly, the capture of the top five slots gave the network an emphatic win for the night, with a 46.9% share of all audiences ranking as their highest share recorded for 2011.

On the back of the other shows Nine News Sunday had an impressive night, averaging 1.597 million viewers to take sixth spot for the evening.
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carter
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Lots of information in this article - 'The Block auction a dose of reality, which Sydney finally loved'. It confirms the couples did indeed put in eight weeks of full time work on the projects, so add another $25K labour to the cost of each home.

Loved this quote -

"The very disappointed Amie and Katrina – the sisters from rural NSW – had an $822,000 top offer, and the house sold subsequent to auction at its $860,000 reserve. They will go home empty-handed to the bush after a journey they described as a “bloody waste of time”."

Quote:
 
The Block auction a dose of reality, which Sydney finally loved

By Jonathan Chancellor

Monday, 22 August 2011

It was a dose of reality when three of the four houses in the Channel 9 series The Block 2011 failed to sell under the hammer at their weekend auction.

But what was noteworthy was there was no shortage of buyers for the Richmond cottages, even when you take out those who had a bidding paddle intended for a few seconds of camera fame.

The genuine buyers – mostly represented by unemotional buyers’ agents who also saw the marketing opportunities – just wouldn’t budge on price, and Channel 9 prudently didn’t want a sale at any cost.

The reserves all matched their marketing campaigns, so the pre-auction raid by Victorian Consumer Affairs to investigate claims of under-quoting was just another stunt that helped the ratings, which peaked at 3,089,000.

For Polly and Waz – the Steven Bradbury of the renovation world – the $855,000 sale was $15,000 and eight bids above its $840,000 reserve. It was the cheapest offering on The Block.

After some commendable auctioneering by Biggin Scott sales director Russell Cambridge, the house was knocked down to buyers’ agent Frank Valentic from Advantage Property, who was apparently buying for a couple holidaying in Bali. Valentic is chairman of the Real Estate Institute of Victoria’s buyer’s agent chapter. Cambridge has been with the Biggin & Scott Richmond team since 1993 and has sold well more than 2,000 properties at auction since.

There's little doubt the producers of The Block 2011 paid above market rates to get four houses in a row on Cameron Street – given they are a rarity. And the challenge of four houses selling in one auction session rather than four units was too high a hurdle.

Nine’s decision for reserves that were moderately reflective of current values was vindicated after the first offering – Jenna and Josh’s double-fronted cottage – attracted a post-auction offer reputedly at its $950,000 reserve.

It had been passed in at $901,000 with just the two bids, including a try-on at $750,000.

It seems negotiations continue on the double-fronted cottage through Woodwards Ruth Roberts and Robert Clements, as the estate agents are confident they can get something above reserve for the contestant couple to take home with them after their eight weeks of intense labouring.

Roberts told the auction attendees that it’s possible for the next buyer to extend the house with a second floor, which Channel 9 didn’t wish to do in order to keep the competitive playing field as even as possible.

Josh and Jenna have now set up their own design company, Bickering Designs.

The very disappointed Amie and Katrina – the sisters from rural NSW – had an $822,000 top offer, and the house sold subsequent to auction at its $860,000 reserve. They will go home empty-handed to the bush after a journey they described as a “bloody waste of time”.

Rod and Tania’s offering got a top offering of $832,000, and it remains listed for sale.

The Block 2011’s Richmond auction results were a poorer showing than last November when for the first time in the four series that one of the four Vaucluse flats didn’t sell under the hammer, and only one fetched an out-of-line bullish result.

Who can ever forget the hoopla at Bondi Beach in 2003 and then at Manly in 2004?

There appeared to be between three and eight bidders (some repeating themselves) on the Cameron Street offerings, which were renovated over an eight-week period by the four contestant couples, who unlike in previous series, worked full time on their renovations.

Unlike the quick-paced auctions put to air, the auctions were painfully long – not assisted by starting an hour late, which prompted at least one buyer on the final offering to head home to his daughter as the babysitter’s time was up.

Additionally every auction was constantly interrupted by the monotonous “Is it at reserve yet?” query.

“Gee, you’re a tough crowd,” Jellis Craig auctioneer Clayton Smith summed it up during the final unsuccessful auction.

For some time now the smart money has been suggesting Sydney was set to enjoy a small property fillip while Melbourne still needed some price adjustment.

Just when and how that will come remains a point of contention, but The Block has assisted in informing the market that property outcomes can sometimes be underwhelming.

The most moving moment of the night had nothing to do with the gavel, but the tide of goodwill towards Josh and Jenna’s engagement.

Even if it too was somewhat contrived for the cameras, with it subsequently being learnt that Women’s Day had been there when he bought the Tiffany ring.

On the all-important television ratings, its seems even Sydney decided to tune in on the last night, virtually equalling Melbourne’s ever-strong hometown audience for the first time during the series.

And Sydneysiders got what they wanted!
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