Will The Block houses sell at auction in today's property market?
Storm clouds may be on the horizon for the grand finale ofThe Block in popular holiday destination Phillip Island.
Five freshly renovated, rebuilt and fully furnished homes in the same gated enclave are scheduled to go to auction on Saturday November 9, set against a backdrop of price slips and a local property market with an abundance of homes for sale.
As Melbourne’s property market lingers in a lengthy period of stagnation, a similar sentiment has seeped into Phillip Island, prompting concerns The Block contestants are facing a gruelling auction finale.
And although Phillip Island buyers are no strangers to the auction process, there is very little precedent to indicate how the rapid succession of five auctions in a row will play out.
“You’ve got five similar homes aiming for a 100 per cent clearance rate,” said Domain chief of research and economics Dr Nicola Powell. But a strong clearance rate relies on strong underlying market dynamics, she said.
“When you look at the Mornington Peninsula, house prices have already peaked and now they’ve dipped,” she said. “Market dynamics are struggling. What that says is it is crucial they set the right reserve.”
“If we use Melbourne as a benchmark, clearance rates are around that 60 per cent mark, which suggests we could see three to five Block houses sell on the day.”
In Cowes, the main township of Phillip Island and home to The Block properties, the median house price is $762,500, down 2.9 per cent in the last year, according to Domain’s latest House Price Report.
However the five Block homes are priced well beyond the median, with the current price guides all set to $1.7 million to $1.85 million.
This year the show took over an abandoned holiday resort on Justice Road, now transformed into a private family-friendly street with a communal pool and tennis court.
From the show’s outset, the five properties were geared towards the holiday home market, with inner-city Melburnians making up the lion’s share of holiday home buyers on the island.
Ray White’s Yvette Tanchef, representing Courtney and Grant in House 2, said Melbourne buyers were still very active on the island, and The Block homes had undoubtedly drummed up substantial interest.
“They’re probably not all to my taste but they are the most high end properties that I’ve ever seen on Phillip Island,” she said. “The clubhouse facilities are outstanding. They have been an absolute bonus to prospective buyers.”
She said her office had enjoyed a strong selling month in September, while October had been steady.
“The market has definitely slowed since Covid,” she said. “We are carrying more listings but it is still ticking along.”
With the spring selling season underway, there is a slew of property for sale on the island, perhaps further compounded by the Victorian government’s levy on second homes and investment properties.
“The property market down here can be quite seasonal,” said local real estate agent Krystal Chandler, of Obrien Real Estate Judith Wright.
“There’s obviously a lot of property on the market at the moment because of the secondary property tax coming into effect. But enquiry has really lifted in the last four to six weeks.”
Chandler is representing Maddy and Charlotte in House 1, and said interest had come from a mix of investors, holiday home purchasers and people looking to move into the homes permanently.
She was reluctant to comment on how the other houses would fare at auction, but said she was confident House 1 would achieve “quite a good result”.
“Anything can happen. Auction day is one of the those things…you can only control so much and the rest is up to potential purchasers and their paddles.”
And let’s not forget: there are multiple factors at play when it comes to The Block auctions.
“The Block has the X-factor and that might be enough to get the five homes sold on the day,” Dr Powell said. “This is not the normal scenario of an Australian selling their home – this is a home with the best marketing campaign one could ever dream of. And then throw in investors that seek a home on The Block because they have got so many inclusions and a generous tax depreciation schedule.”
In recent years, property moguls and rich listers Danny Wallis and Adrian Portelli have dominated the auctions, serving up knock-out bids and scooping up a combined total of 15 Block homes.
Both figures attended the Domain Buyers jury night, but there has been no public confirmation that either intends to bid on the day.
Also entering the fray this year is co-ownership platform Paradoor, hoping to bid on behalf of a syndicate of buyers.
Another consideration ahead of the finale is the all-important auction order, which is yet to be announced. Traditionally if the most popular property goes first or second, leftover buyers may trickle over to the remaining auctions, giving contestants the best chance at success.
With so much up in the air, one thing is certain: the contestants are in for a nail-biting finale.
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