Will The Block houses actually sell at auction this year?
Five freshly renovated and furnished homes in Hampton East go under the hammer this Saturday and, with Melbourne’s clearance rate hovering below 60 per cent, the multimillion-dollar question is: Will The Block homes sell?
The contestants, auctioneers and registered bidders are likely overcoming bouts of nerves, excitement and sheer terror ahead of the big day, when the five Charming Street properties will be auctioned one after another.
Looking back on last year’s results is anything but reassuring. In Gisborne, three out of the five Block properties passed in, and one home that sold under the hammer only fetched $20,000 above the reserve, one of the smallest financial rewards in Block history.
Overall, the finale was a flop and all the contestants – with the exception of winners Omar and Oz – were left reeling. So is the same fate awaiting the teams this year?
Property experts are confident the results will be better than last year, given The Block has returned to metropolitan Melbourne. Hampton East is a popular, family-friendly suburb in the city’s south-east, and is close to train lines, shops, well-regarded schools and the beach.
The dynamics of the wider property market have also shifted, according to Domain chief of research and economics Dr Nicola Powell. This time last year, property prices were falling – and very quickly. This year, Australia’s housing market is nearly back at pandemic peak prices.
“If you compare to just over 12 months ago, the market was very different,” Powell said. “This time last year, we’d seen four back-to-back rate hikes that were 50 basis points each. This was a very stressed period of time, and that was coming out in nervousness for buyers and sellers. Nobody knew when it was going to end.”
Powell said we were now close to a cash rate peak and “the aggressive rate cycle from the RBA is now behind us”.
According to the latest Domain House Price Report, released last week, Melbourne house prices grew in the last quarter. Powell said the city’s property market had proven to be resilient and stable over the past 12 months.
Last weekend, almost 1400 properties across Melbourne went under the hammer, the largest auction volume in 18 months.
“Clearance rates are still around that 60 per cent mark,” Powell said. “If we use that as a litmus test, three to four Block homes will sell [at auction].”
But she stressed that having five similar homes on the same street go to auction on the same day was highly unusual.
The Charming Street homes have price guides far lower than last year’s reserve prices of $4.08 million, but they are much higher than Hampton East’s median house price of $1.4 million.
The suburb’s median has fallen 6.4 per cent in the past 12 months, according to Domain Group data.
The strongest clue yet that this year’s houses could sell for a hefty sum was an update made on Monday to the price guides.
When the listings went live on Domain in August, every house was given a price guide of $2.5 million-$2.75 million.
However, on Monday these figures were revised upwards. Houses 1 to 3’s price guides were lifted to $2.7 million-$2.9 million, while houses 4 and 5 were lifted to $2.8 million-$3 million – increases of between $100,000 and $300,000.
Under Victorian law, agents must include a statement of information when a property is listed for sale, which gives either an indicative fixed price or an indicative price range. This is to give consumers and potential buyers confidence, prevent underquoting by real estate agents and avoid situations where the advertised price of a property is significantly lower than the estimated selling price.
When an agent sets a price guide at the beginning of a campaign, it’s usually based on a range of factors, including data on recent comparable sales and local market trends.
But the agent is also legally required to update that price guide in line with expectations; if there is strong interest in a property that indicates there could be a lot of competition on auction day, or if potential buyers have indicated a willingness to pay beyond that price guide, the guide must be updated accordingly.
In revising these price guides upwards, the agents are leaving clues that buyer demand for The Block 2023 houses is outstripping original expectations.
Jellis Craig director and senior auctioneer Nick Renna said homes in the $2 million to $3 bracket in Melbourne’s south-east had performed well in recent months.
“There’s surprisingly a lot of people in that market,” he said. “We’re finding turnkey homes are going really well.
“We are seeing a lot of international buyers in the market. That’s been super strong for us – they’ve bought 30 to 40 per cent of our stock across our three offices.”
Renna will be auctioning House 5 this weekend, the home Eliza and Liberty renovated. At the time of publication, the contestants and agents were not aware of the auction order.
“There is a group of buyers we feel like are overlapping with certain properties,” Renna said. “So the auction order is going to be important, and the floor plans are going to come into play.
“I think there will be some buyers [but] I’m not 100 per cent sure if all the homes will sell.”
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