More on “The block” flop

Earlier this year The Unconventional Economist and I were interviewed by Christine Kenneally for an article in the The Monthly. Christine is a well-written journalist and author who has written for The New Yorker, The New York Times, Slate and New Scientist along with authoring her own books.

Today, inspired by The block flop , Christine has posted a small follow up on her blog. I have reproduced it below, but please take some time to visit Christine’s site as there is some very interesting reading over there.

If a property bubble pops but no one reports it, does anyone know it has happened? I wrote about the Australian property market and disturbing real estate journalism in Australia for The Monthly in May. For the piece, I spoke to bloggers like Delusional Economics and the Unconventional Economist. If journalism is the fourth estate, these guys are the now apparently necessary fifth. They pull no punches, publish real data, unspin the sales pitches and declare their interests.

This post is belated but I was reminded to put it up today by the (surely) world first spectacle of a highly successful reality TV series accidentally imploding in a prime time slot, while at the same time, breaking actual news.

“The Block,” an Aussie show in which four couples compete to renovate and then sell a house at auction aired its finale on Sunday August 21. In previous seasons, the action on The Block has mimicked the real-life fever-dream that is the Australian real estate market of the last five+ years. Houses sell fast and high, credit is cheap, auctions make people crazy, and most people who don’t yet have a house are driven by terror that they never will. Underlying all of this is the religious belief that property always goes up.

But last night The Block unintentionally revealed on national TV that property-as-pathology is over. In a private auction where bidders had to pre-register (and were sworn to silence for 24 hours), only one of the four houses was sold.

One can’t help but wonder what the show’s sponsors and advertisers are talking about this morning. McDonalds, Mitre 10, and other companies ran ads in every break, many featuring couples from the show. What about the design companies whose beautiful furniture was featured in the houses that couldn’t sell? What does it feel like to have one’s products prominently displayed in such a debacle? What about the auctioneers from prominent real estate companies who stood up in front of the cameras to show off their fast-talking trade? They failed in front of more than three million people.

Most newspapers ran the story with a photo of the winning couple–that is, the only couple to sell a house, not the couple whose house sold for the most money. But there were surely many shots from the show that they could have used instead, pictures that told the actual story. Maybe a shot of the two sisters who barely saw their husbands or small children for weeks as they worked like indentured servants for the show. As their house failed at auction, their expressions went from stunned to sour. One turned to the other, either forgetting or no longer caring that she was being filmed. That, she said, was “a waste of time.”

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  1. It’s really hard to have any sympathy for those contestants though. They were all in it to increase their own celebrity and get their own TV careers going – if they were in it on the off chance they were actually going to win and/or make money then they should have gone on “Deal or no deal”; their chances of making money would have been better and they wouldn’t have had to spend months slaving away with their lives on show in front of the TV cameras.

    Reality TV has had its day anyway – who watches “Survivor” anymore? However given the huge ratings success that the “Block” was for Nine I have no doubt we’ll be seeing more dribble like this for at least another twelve months… or at least until the housing bubble has well and truly popped and everyone gets embarrassed about how much money they’ve lost.

    • I dont think reality TV is over SG it just needs to adapt to the conditions. Watching the train wreck that was “the block” was actually quite entertaining for housing bears that well and truly brought the housing market collapse into the homes of millions of veiwers for the first time.

      Maybe they could call the next series “mega mortgage survivor” that shows the lengths people are going to to pay their ridiculously oversized mortage that they chose to take out? or maybe even “the chopping block” that lists what people are cutting back on in order to live the great australian dream of debt slavery?

      • I really like that idea GB, given Nine are desparate for any decent local content you could certainly pitch it to them and see how it goes!

      • StroppyTheWonderDog

        Still the only one worth watching.

        But I did record the repeat of the final episode of the Block (it was on Monday arvo) just to see some ‘reality’ sink in. Is that wrong of me?

  2. Fabian Aldersey

    Just a note on Christine’s name – the links (and her site) spell her name with a “ch”, but in your references to her you’ve spelled it with a “k”.

  3. DE, it might have been you, but didn’t someone on MB predict this outcome?

    Maybe The Block will wake people up, as I still see property guys is my local coffee shop selling investing in property to people. I gave my view to one of there guys a few months back, and got a mouth full.

      • Yeah,QC..back then I wrote …’they should paint the Block vitamin C and cut the Lemon in half and suck on it ,before they get a sick rating…’

        Since then ,and Yep,the final was a ‘whoops moment’ grand…that turned into a social lessons on
        ‘How to Kenny the housing Coyote’ 4 times in a row’….via a live broadcast….could have called it ,Penny’s and Pin Drops ,the finals a flop..
        Thanks DE ,…cheers JR

  4. Sandgroper Sceptic

    Good riddance if this sort of nonsense is no longer aired in Australia.

    MSM must hate this…their clients are going to pull their advertising.

    • That is awesome…

      “The world has gone crazy – they wont buy homes for over 850K”

      “Its not fair – flipping homes has always worked in the past”

      Watching these bogans realise the perils of property investment on national TV in front of 3 million viewers – could a property bear have a better night’s viewing.

    • Interesting that they all clearly thought they were on a winner.

      The comment that ‘the worlds gone mad’….priceless.

  5. I’ll put my hand up for being a contestant or maybe even a producer next year. Here is my concept for The Block 2012.

    We revisit the unsold homes and demolish them, salvaging anything of value and flog it off on ebay/trash and treasure, and hock the furnishings at Cashies to pay for groceries/school fees/fuel and the other necessities of life that go unattended when you take on intergenerational debt.

    The winner is the one that strips the place TO THE BLOCK and maximises the returns.

    (p.s. Channel 9 I want my royalties if you pick this idea up)

    • How about live looting of the plasma TV’s & designer furniture then burning the empty dumps to the ground, while rioters battle the police on the street outside?

      That is gonna make good TV.

  6. Could SBS or the ABC take it over and make it into a Greek Tragedy? A little bit fall of Troy mixed with Julius C and a dab of Cleopatra?

    I’d love to see a real estate agent clasp an ass (the snake type of ass that is) and die at the end of it all – two snakes in a dying embrace, one no more full of venom than the other, while declaring the death of their one true love. Greed.

    Or else, turn the places into a shelter for all the out of work spruikers?

  7. This seems to be generating quite a buzz and finally provides tangible ‘proof’ for the masses.

    I wonder how this is going to impact the psyche of the average would-be buyer…

    • Anon – good point, as much as this is funny viewing, the effect of this on the property collapse will be massive.

      In the boom, these shows fuelled the fire. During the bust, their failure will ram the point home.

      I am amazed people in the MSM arent tying the Block flop to the bubble – they will in time, this is another pivotal moment. Thanks Channel 9 – you silly idiots!

      • endrortsonhousing

        I agree – I think the Block results on Sunday night will prove to be the ‘Lehmann Brothers’ moment for the Aussie housing market.

      • I think we still have a hangover from the orginal Block in Bondi years ago. Like my wife said, this was a time when you paid $1m for a total heap, but a week later, some idiot would buy it off you for $1.2m. People still want this to be the case. They will cling to that hope for a while yet.

        Hope is a dangerous thing……….

      • When you meet people who are delighted to hear that house prices are coming down, and they have a house, you realise how badly screwed up the whole thing is. They are pleased even though their main asset has or will lose value. Screwy. They are pleased because their kids will have a chance to buy a house.

  8. After watching the auctions, I have only one question – Who the hell was the guy in the pink suit in the audience? He had some some ad label stitched on too!
    Guys over at WP forum’s house prices thread had some funny interpretations on the auction clearance rate – 50% – because 1 sold, 1 passed in, 2 not reported .. LOL.

  9. I’m a renter based in Coburg. I know that that owner of the house is living in NSW and that the place is under mortgage. Today we got a call from the rental agent saying that an evaluator is going to come over and look around. I wonder if the owner was watching last night and thought that it is now or never in regards to selling. Or, it could just be a coincidence.

    • Absolutely the worst thing to do now is add to the stock in a housing market filled with stale dead carcasses of many a property investors dreams.
      My landlord is more prudent – 2 months before the current lease expires, they offered to extend the lease at the same level of rent for another 6 months. Notionally, I can probably get a better deal elsewhere in 2 month’s time, but I can’t be bothered to move houses.

  10. All the producers needed to do was drop each of the reserves by 50k and all 4 wiuld have sold. It would have been a huge success. The unwashed masses would not have noticed (nor cared) that they were massively underwater

    • Yeah, and their mojo line is something along the lines “turn it into real estate GOLDMINES”…..See goldmines can be sprung up by a well designed renovation plan.

      There can be no shortage of goldmines…….ever……

  11. I think the other problem they had, was if U were interested in buying one of those houses, U watched it being built and the quality issues involved. Besides the point, the places has NO central air or heating. Just that stupid heater stuck in the middle of the lounge room under the TV for everybody to look at.

    I could see another $50k to $100k each to bring them up to a quality reno which somebody spending over $900k would be looking for.

  12. I just got a phone offer about 10 grand for 10 years tax free guaranteed, with the stamp of the Western Australian government. All I have to do is invest in housing.

    Anyone else hear about this? I can’t find anything online, in the rumour mills or official sources?

  13. This is such a serious issue. So many are/will be hurt either way – if there is a bubble or if there is no bubble. I think it will happen slowly, a long slow goodbye to the high prices. Which government will step forward and do anything reasonable about this? 30,000 on the Queensland Department of Housing waiting list for public housing. Unbelievable.

  14. well, seems like the other 3 have now been sold post auction. Looks like above the reserve prices set aswell!.

    Dont us housing bears love a good train wreck story!