The Block auctions 2019: How will the Oslo houses in Grey Street, St Kilda perform?
Auctions are nerve-wracking at the best of times but the state of Melbourne’s housing market is putting pressure on contestants in reality renovation show The Block, who will go to auction this weekend.
Falling house prices cast a cloud over the early part of this year’s project. As contestants renovated, Melbourne’s property prices hit rock bottom, plummeting 10.7 per cent from the peak in late 2017 to the trough in March.
But since the June quarter, these prices have rebounded, lifting by 5.5 per cent across Melbourne since March, on Domain data.
Although prices are still below their peaks, the turnaround has brought hope to the five couples trying to sell the houses they have spent months re-building and renovating.
The three-storey terrace homes, part of the former Oslo Hotel in Grey Street, St Kilda, are five of 928 properties set to go under the hammer this weekend.
Agents and even buyers’ advocates are upbeat about their chances of selling, with some tipping deals above the $3 million to $3.3 million price guide.
Buyers’ advocate Nicole Jacobs, of Nicole Jacobs Property, has purchased 13 properties on The Block in past series and said even though there was always a risk homes may not sell under the hammer, there had been a lot of interest in the Oslo.
“I can’t see any passing in, especially with the strong investor interest,” Ms Jacobs said. “We know people have the capacity to buy.”
Local investors were showing keen interest as were owner-occupiers, including those with older teenage children.
“There’s been very firm interest across the board – a lot of investor interest especially given the higher depreciation schedules,” she said, referring to possible tax deductions.
Ms Jacobs predicted the area’s property values would rise amid new projects, including a recently announced redevelopment of Rydges Hotel on Fitzroy Street.
The Oslo houses could garner a good price given the Gatwick apartments sold for around $15,000 per square metre last year. Apartments at nearby St Moritz were selling for $18,000 to $20,000 per square metre, she said, and Domain understands some apartments have even sold in excess of this price range.
With the market still improving, St Kilda property prices are below their peaks.
House prices in St Kilda fell 6.9 per cent to a median of $1.582 million over the 12 months to September, compared with the previous year. Unit prices in the suburb were down 4.5 per cent to $500,000, on Domain data.
Clearance rates in the suburb are at their highest point in 12 months but lower than Melbourne as a whole.
St Kilda’s monthly clearance rate jumped from 49.4 per cent in October 2018, to 65.7 per cent in October this year – still below Melbourne’s overall clearance rate of 70.1 per cent.
Domain senior research analyst Nicola Powell said Melbourne’s current auction clearance rates could mean all but one house sells at auction.
“It’s still going to be hard to get 100 per cent clearance rate on auction day,” Dr Powell said.
Agents and contestants hope that there won’t be a repeat of The Block 2011 which saw three of the four properties in Cameron Street, Richmond pass in and sell post-auction, amid a tough market with lower prices and a large number of homes for sale.
WBP Group buyers’ advocate Greville Pabst, who bought the winning property in 2017 for comedian Dave Hughes, hopes all five sell under the hammer.
It would come down to the order properties were auctioned in as well as the reserve price set on auction day, he said.
“If reserves are set realistically, with lowish numbers, they’ll all make some money,” Mr Pabst said. “The last thing we want to see is pass-ins.”
McGrath St Kilda’s Michael Townsend, who is selling Andy and Deb’s home at 38C Grey Street said buyer sentiment was changing as the market turned.
“We’ve run the full gamut of the market over the calendar year and sometimes that’s made us a bit twitchy,” Mr Townsend said with a laugh.
“But now is the best conditions Melbourne has experienced this year.”
Although they are confident, agents acknowledge the challenges in auctioning five similar properties on the same day.
“It will be a little bit difficult,” Wilson Port Phillip’s Graeme Wilson said. “In a normal market people wouldn’t be offered this selection at the same time.”
Mr Wilson is selling Mitch and Mark’s “party house” at 38A Grey Street, which he believes has an edge over the other properties given its unique layout.
Last year, Mr Wilson helped sell Courtney and Hans’ apartment in the Gatwick with now Block contestant, and auctioneer, Jesse Raeburn.
This year, The Agency’s Brendan Walker is selling on behalf of Jesse and his partner Mel. Their home at 38E Grey Street has had between 15 and 20 private inspections at time of writing.
Walker believes fewer properties on the market across St Kilda, and easier access to credit for borrowers, meant more competition on auction day.
Hocking Stuart Albert Park’s David Wood was confident of selling Tess and Luke’s home at 38B Grey Street for a good price.
Mr Wood sold Kerrie and Spence’s apartment at the Gatwick for well above the reserve last year.
He was expecting to sell at the Oslo for the higher end of the price range, about $3.3 million.
“We haven’t gotten anything [feedback] that’s saying they will sell for anything above that, but with competition at the auction, anything is possible,” Mr Wood said.
Biggin & Scott Richmond’s Russell Cambridge, who is selling El’ise and Matt’s terrace at 38D Grey Street, said it wouldn’t be a normal day at auction given the types of properties, their location and expected prices.
“I have a gut feeling everything will sell on the day,” Mr Cambridge said.
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