I’ve just watched the final episode of the reality TV show The Block. For those who are unfamiliar, it’s the one where four couples compete against each other in doing the best renovations on four run down properties adjacent to one another, which are offered up for sale at auction after all the work is complete. The couples are average people and the renovations are done quickly under heaps of pressure.
I guess in a way it is meant to reflect what lots of people do all over the country – buy a run down property, do it up then sell at (hopefully) a profit.
When the four properties in The Block went up for auction, three of them were passed in (they didn’t sell). The one that did sell sold for only $15,000 above the reserve. The reserve price in a normal auction is the lowest price the seller will accept, but for The Block properties, the reserve price was based on what the properties were professionally valued at before the renovations were done (yep, when they were dumps – holes in walls and floors, etc).
Why did only one property sell? Was it because auctions will never get you the highest price, because the renovations were done too quickly or not to the potential buyers’ liking, because the property market in the area has dropped significantly since the valuations were done, or because potential buyers did not want their face to appear on TV? Perhaps it was a combination of all these factors.
And here is a scary thought for people holding lots of debt laden investment properties: will the millions of Aussies watching tonight’s program think to themselves that this is signalling a turn in the property market? What effect do you reckon that will have on investment properties, particularly if they are ones that have had lots of time and money spent on doing them up?