Back in June I noted that Channel 9 had completely overestimated the housing market for this year’s production of “The Block”.
The production company behind Channel 9′s hit, The Block, may have bitten off more than it can chew after paying $3.6 million for a row of rundown terraces in Richmond.
As the property market cools, Watercress Productions might struggle to cover the cost of sales and renovations to the houses, which are in the shadow of the troubled Housing Ministry estate.
Watercress bought four Victorian and Edwardian terraces in a row after they passed in at auction in November for $2.85 million.
It also paid $198,000 stamp duty, taking the cost of each house to just under $950,000 before a porcelain tile or glass splashback had been put in place.
JPP Buyers Advocates’ Catherine Cashmore said Watercress would be “very, very lucky to break even” on the deal on sales price alone.
“They are starting high and it’s a very big ask,” Ms Cashmore said.
As I asked then:
This makes me wonder exactly what would happen to the psychology of the bubble in Australia if one of these TV shows turn out to be a complete flop on its concept.
Well last night was the big night and as expected it was a “complete flop on its concept”:
Josh and Jenna
The first property under the gavel was Jenna and Josh’s, and things got off to a shaky start. Their auctioneer asked for an opening bid of $900k and a call came back: “$750k.” Things didn’t improve and the property was eventually handed in — a stinging blow for the young couple.
Polly and Waz
Next up Polly and Waz faced the buyers’ scrutiny. After an initial bid of $700k the numbers gradually crept upwards. Riotous applause was heard when the $800k threshold was crossed and after $840k the house was officially on the market. The word “sold!” finally rang out at $855k.
Katrina and Amie
Bidding on Katrina and Amie’s house got off at a cracking pace and quickly passed $800k — then ground to a halt. Despite the best efforts of their agent, bids didn’t rise above $822k and the property was passed in. The sisters were bitterly disappointed.
Rod and Tania
Rod and Tania’s was considered by many to be the dark horse that could surprise and the crowd cheered when their auctioneer began, speaking at a dizzying pace. Bids rose in steady $10k jumps — then, in another shocking surprise, things stalled at $832k. Sadly, their property was also passed in.
Polly and Waz, the couple who began the series with the least renovation experience, took out the major prize — in addition to their profit above the reserve, $15k, they also walked away with $100k in prize money.
To say the others were disappointed is an understatement. But Rod remained philosophical and he was genuinely happy for the winning couple: “Look, that’s just the way things happen. I’m really proud of Waz. He just soaked up the experience and learnt so much. He never complained or caused trouble. He just got on with the job. Well done.”
What a gobsmacking end to a fascinating series. That’s it for 2011 — but watch this space for The Block 2012!
Gobsmacking? Not the word I would use, and I am doubtful we will be seeing a return of the show in 2012 as it has probably been the worst advertisement for the property sector in the history of advertising. It would have certainly cemented in any doubter’s mind that housing is under pressure and “flipping” is on its last legs. Although, ironically, the road accident effect led it to be a huge ratings success. So, we may in fact be treated to the spectacle of such programs tracking the destruction of the market.
If the wipeout on the sales front wasn’t bad enough, it seems that the transactions themselves could be under investigation:
Real estate agents handling the sale of houses on Channel Nine’s DIY renovation hit, The Block, are being investigated for under-quoting the property values.
Inspectors from Victoria’s consumer watchdog seized sales documents and advertising material from the offices of Hocking Stuart, Biggin & Scott, Woodards and Jellis Craig on Thursday.
In Victoria, under-quoting occurs when the property is advertised for less than the agent’s price estimate on the sale authority or less than what the vendor has told the agent they are willing to accept.
The agents, who all denied any wrongdoing to The Sunday Telegraph, face fines of almost $25,000 each if found guilty.
“Consumer Affairs Victoria took a proactive approach to this high-profile sale that has been subject to a lot of media,” CAV spokeswoman Heather Abbott said.
The four Edwardian and Victorian properties, which stand side-by-side in Cameron St, Richmond, went under the hammer last night at an invitation-only event at Fitzroy Town Hall for the show’s grand finale to be aired tonight.
The three single-fronted properties were initially advertised for $800,000 to $880,000 while the double-fronted house was advertised for $900,000 to $990,000.
Those figures raised eyebrows in real estate circles, particularly as one judge, Sydney real estate agent John McGrath, valued them at more than $1 million. Quotes were later removed from advertising.
Biggin & Scott Richmond’s Russell Cambridge, agent for Polly and Waz at 37 Cameron St, denied under-quoting.
“I have no problem whatsoever with Consumer Affairs Victoria reviewing this sale, they will be pleasantly surprised,” Mr Cambridge said.
Given the auction results I suggest that underquoting is the exact opposite of the problem.
Former RBA Governor Ian Macfarlane once said that one of the housing bubble symptoms he identified in 2003 was the proliferation of property related television programs. What does it say if they continue into the bust?