The Block 2020: What's the state of the Melbourne and Brighton market leading to auction day?

The timing might just be right for The Block houses in being auctioned this weekend to achieve strong prices, experts say, as Melbourne’s housing market has charged back after lockdown.

Melbourne’s median house price held steady over the September quarter at $875,980, and Domain senior research analyst Nicola Powell said she expected prices to go up, given the flurry of activity through October and November after Melbourne’s hard lockdown was lifted.

“Now that Victoria has smashed its goals in containing the virus and the market is opening, what it means is its rejuvenated activity,” Dr Powell said. “Rates are historically low, and I don’t think we’ll probably live through such low interest rates again in our lifetimes.”

She said months ago the prediction would have been very different, with most experts at that time forecasting steep price falls.

In Brighton, the location of The Block houses this year, house prices were up by 15.2 per cent for the year to $2,650,000 – making it the third-most expensive suburb in Melbourne behind Toorak and Canterbury.

Dr Powell said although prices were up by 37 per cent for the five years to September, the suburb has been through a property cycle – seeing price falls in that time, but now recouping those falls.

“Brighton is an aspirational suburb, and those suburbs always have a strong following from buyers,” she said. “The upper end of the market leads downturns, but it also leads the recovery.”

Most of the buyers in the market now were owner-occupiers looking for a lifestyle change, Nick Johnstone real estate director Nick Johnstone said.

“Family homes are the strongest market by a mile,” he said. “People have been starved of choice during lockdown.”

Buyer’s advocate Nicole Jacobs, who attends The Block auctions each year on behalf of clients, said family homes were still in short supply in the area, meaning the five houses on New Street sat “favourably in the Brighton market”.

“You’ll be able to get maybe bigger blocks in Brighton in the same price range, but they won’t be completely renovated and they definitely won’t have all the furniture,” Ms Jacobs said.

She said family buyers were out in force, but The Block properties also attracted investors looking for strong rental returns and depreciation schedules owing to the high-quality furniture and homewares included in each house.

“They know that Brighton’s a great postcode so they’re going to have capital growth as well,” she said.

One of those investors could be comedian Dave Hughes, who talked about inspecting the houses yesterday morning on Triple M radio’s The Hot Breakfast.

Hughes bought Josh Barker and Elyse Knowles’ winning home on The Block 2017 and said this year’s houses are similar to those in the Elsternwick series three years ago.

“I do the numbers and I’ve got to be honest guys, they’re good buying,” Hughes told radio hosts Eddie McGuire and Luke Darcy. “People love living in them, they’re great houses and they’re really well built.”

Though auctioning five homes next to each other on the same day was a big ask in any market, Ms Jacobs said buyer confidence was strong, especially for well-priced family homes.

“That fear of missing out is sometimes driving this market,” she said. “Buyers are lining up again.” 

Veteran Block buyer’s advocate Greville Pabst said interest for the properties was coming from local families.

“The buyer is going to come from Brighton or bayside,” Mr Pabst said. “The Block houses have everything in them, they have the latest and best of everything.”

Though there was strong buyer demand since lockdown ended, some vendors still had “unrealistic” price expectations, he said, meaning their homes were taking longer to sell.

“Those in secondary locations, for example on a main road, or those with floor plan issues, are not flying out the door,” he said.

Although New Street “carried a bit of traffic”, he still expected the houses would sell within their asking ranges of $3.2 to $3.4 million – adding: “They are very good homes and the quality gets better every year.”

Another long-time buyers advocate on The Block, Frank Valentic, said he may just buy one of the houses for himself, having recently sold his home in the area.

“If they come in at a good value for me I’ll look at one,” Mr Valentic said, adding he had not decided which house he would go for yet.

He said since lockdown properties in Brighton and surrounds had been selling for hundreds of thousands of dollars above the reserve prices.

“It shows buyers don’t have a lot to choose from,” he said. “It’s definitely a seller’s market.”