A buyers agent's view: Behind the scenes of The Block Glasshouse

Guest observation

The aftermath of bidding on our fifth Melbourne series of The Block has been busy and we can’t believe how much interest the auction finale generated.

It was the most watched reality TV program for 2014 with around $2.8 million viewers.

The Block auctions in 2014 are now over and we congratulate all the contestants on their great renovating efforts and feel disappointed for the three contestants who weren’t rewarded for their efforts.  

This year’s Glasshouse contestants earned a total of $805,000 in total, or $163,000 each on average.

The profits (including the winning $100,000 prize):

1. Simon and Shannon: $435,000
2. Chris and Jenna: $310,000
3. Maxine and Karstan: $40,000
4. Michael and Carlene: $10,000
5. Deanne and Darren: $10,000

Last season's winners earned much more, with the total combined profit of $2,426,000, working out to be an average of $606,625 each.

The Block Fans v Faves profits (including the winning $100,000 prize):

1. Chantelle and Steve: $736,000
2. Lysandra and Alisa: $616,000
3. Kyle and Kara: $567,250
4. Dale and Brad: $507,750

The previous series' Sky High contestants earned a total of $1,383,000 (an average of $276,600 each).

The Sky High profits (including the winning $100,000 prize):

1. Alisa and Lysandra: $395,000
2. Madi and Jarrod: $291,000
3. Matt and Kim: $250,000
4. Bec and George: $242,000
5. Trixie and Johnno: $205,000

You would also be disappointed if you were the Cameron Street Richmond contestants, who in 2011 won much less, with total winnings of only $225,000. 

Fortunately there was better buying this series, with gross rental returns of around 5%.

Myself and many other real estate professionals believed that the properties would sell in the vicinity of $1.5 to $2.0 million, which was what similar luxury apartments were selling for within a one kilometre radius.

We were bidding for an investor for Jemma and Chris’ apartment (pictured below) with a budget of $1.5 million, but unfortunately we were one of four bidders and it sold to another buyer's agent who was representing a local  investor for $1,810,000.

It ended up being a two horse race, with a young Chinese couple bidding, and after it was declared on the market, there were another thirty one $10,000 bids and the property sold for $310,000 above reserve. 

Simon and Shannon’s apartment was our first choice for an investor who had missed out on a number of properties in the Albert Park series. Many buyers rated the boys’ apartment (pictured below) as the best and as we had overheard other buyers talking budgets of $2 million regarding bidding for this property. 

We quickly increased the bidding from an opening bid of $1.5 million by another buyer's agent to a $1.7 million bid, as we knew the Chinese couple representing their parents from overseas had already bid to $1.8 million on the last property.

We had seen them have plenty of time to increase in increments of $10,000 in the last auction and they subsequently pushed the price upwards by another $310,000.  

So we tried two quick fire $50,000 knock out bids and we secured the property for $1.9 million which was well under our client’s maximum budget. 

Shannon and Simon’s apartment was definitely what my buyers had indicated they were looking for and I’m very pleased for my client.  

The boys and their builder did do a wonderful job and were deserving overall winners of the show.

We had an investor client who was a local business owner who was keen to snag a bargain (around the $1.6 million mark) for the next auction but we only got one bid in with the Chinese buyers buying Maxine and Karsten’s property to $1,710,000, just $40,000 above the reserve.

This was a lot lower than everyone expected and I personally rated theirs as the best apartment (pictured below), with its north facing sunny orientation and bonus of a potential fourth bedroom.

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The next auction was Darren and Dee’s apartment which none of our buyers rated due to its smaller size, especially in the living area (pictured below).

There were only a few bidders and it sold for $1,390,000, only $10,000 above reserve. The building of an extension next door wouldn’t have helped as you are now looking out onto a brick wall from your living area.

The last auction was Michael and Carlene’s apartment, which again wasn’t rated highly by our buyers because it was dark and south facing (pictured below). There were only a few bidders and it sold for $1,390,000, only $10,000 above reserve.

The eerie feeling after the last three auctions was similar to the feeling after three out of four houses in Cameron St, Richmond passed in at the Fitzroy Town Hall.

Everyone felt the three contestants’ pain after all the hard work they had put in.

Some interesting point to consider from this year’s auctions on The Block:

1. The properties sold for a total of $8.10 million which was an average of around $7,700 per square metre of building at an average of around 207 square metres of internal living area.
   
   There were some good buys as the bigger “The Art” development across the road with fifty apartments sold for around $9,000 per square metre. Valuer Greville Pabst predicted they would sell for an average of $2,480,000 each or $12,000 per square metre.
   
   There were also five properties on offer instead of the usual offering of four in previous series which meant buyers had more choice and were spread over more properties.
   
   
2. The main road location attracted less buyers than last year’s prime Albert Park location where the properties sold for around $14,100 per square metre of building at an average of around 170 square metres of internal living area.  
   
   Half of the buyers last year were home buyers that buy with emotion, whereas all five buyers this year were investors, although my client may move into the property in the future.
   
   
3. The growing presence of the overseas Chinese buyer was seen at the first three auctions, where a young couple were bidding for their Chinese parents overseas. Once they had bought at the third property auctioned, the last few properties, which were seen by buyers as less desirable, sold for less. 
   
   There were also a number of overseas Chinese investors bidding on the Albert Park apartments, showing their growing presence.
   
   
4. Television again didn’t really do justice to the amount of capital that was invested in the internal renovations with a building permit for $600,000 for structural works in the contract as well as all the fittings and fixture renovations and all furniture and furnishings.
   
   The massive warehouse style ceilings gave the apartments a real wow factor. They also all had the bonus of an oversized double lock up garage (around 60 square metres in
   size) and a 70 square metre storage room that was bigger than most 2 bedroom apartments. 
   
   The Block producers also invested much capital into the common areas, including a tropical courtyard area.

In summary, our fifth auction experience on The Block was another exciting action-packed night. Our other two investor clients were disappointed to miss out on some good buys, although they understand how important it is to stick to their set budgets. 

The TV show continues to have a successful formula and attracted great support from viewers. 

My family and I enjoyed watching the series again and enjoyed being a part of the experience again and this showed again how unpredictable any property market can be.  

The great Australian dream of owning a beautiful home continues to appeal to viewers and this year resulted in great viewing results for Channel 9 and some good results for the successful purchasers.

We look forward to hopefully being involved in our sixth Block series with the apartment conversions at 27 Darling St, South Yarra which they have already started working on.