What The Block can tell us about the Property Market
The live auction of 'The Block' properties last night was a media success. The format of matching reality TV with home renovation and the kiwi's fascination for all things property appears to be a goldmine not only here in NZ but in Australia, the commitment is there for a 3rd season.
As for the programme as an insight to the property market, there are some interesting pointers to reflect on.
Firstly reflecting on the 1st series which ended in early August 2012, I wrote a couple of articles at the time examining the lessons that could be learned from the auction, the insight as to marketing properties and also the overall commercial result for the media company.
In anticipation of the auction held last night, I was of the opinion that there might be some very disappointed participants after the auctions. I questioned whether the scale of the projects might have pushed the properties into a price bracket that exceeded the market interest and potential. I felt that last year the programme was very lucky to sell all the houses on the night - the interest in the 4th house was so weak it only just made the reserve.
In my opinion it is very unusual to find enough active, financially capable buyers who are prepared to spend c. $1m on a house in that area in front of the media spotlight, let alone find enough buyers for 4 properties.
The result of the 4 auctions left a single indelible message in my mind - The Auckland Property Market is very strong and holds strong demand which is why the auctions were successful.
I think that unlike last year, this year's bidders at the auction comprised 4 discrete groups who each were focused on the house that they wanted to buy, whereas a year ago the interest was far more generic to 'the houses' collectively - which is why interest declined progressively after each of the houses were auctioned.
The success for Alice & Caleb was the result of smart renovation design combined with a property with appeal that offered good space. They had a property with character (a villa), their renovation was done to appeal to a broad audience and the result showed on the frenetic 95 bids that lifted the opening offer of $700k to the successful sale at $1,126,000, $181,000 over the reserve. It was irrelevant that their house was the 3rd to be auctioned, the property had appeal.
The same is true for Alisa & Koan who also had a character property which they renovated to appeal to buyers and 22 bids after their opening bid of $700k saw it sell for $1,014,000 a margin of $66,000 over the reserve. There was genuine demand for the property even thought it was the last to be auctioned on the night.
The other 2 properties which were the first to be auctioned achieved $25,000 and $27,000 over the reserve and attracted less bids and far less frenetic bidding simply because their properties lacked the character appeal and were somewhat more individualised in decor and design. Although ironically these were the properties that probably made for better TV.
So the lessons of The Block are clear - character properties renovated sympathetically with modern convenience to appeal to the broadest audience with good size and space will always capture top dollar, particular;y in that part of Auckland. As for the 'hoopla' of the live auction, I think this year it made no difference as the buyers of these houses came to an auction committed to buy these houses, the fact that is was televised was not relevant, the strength in demand for Auckland property shows no let up as was seen last night. There were undoubtedly pospective buyers who left last night not having bought one of the houses.