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Auction day nerves on The Block as price guides revealed

Five homes renovated by contestants in Hampton East have just been listed for sale.

Five homes renovated by contestants in Hampton East have just been listed for sale.

There are growing concerns history may repeat itself on Nine’s flagship renovation show The Block, after official price guides for the Melbourne houses they bought reveal some have fallen way short of what was paid for them 12 months ago.

Nine-owned company Micjoy Pty Ltd paid $14.3 million between June 29 and July 1 last year for five unrenovated 1950s brick houses on Hampton East’s Charming Street, setting an average sale price of $2.86 million.

Last week, the finished homes were officially listed by different real estate agents online.

Five contestant pairs (or couples) were recruited to renovate the homes, with reports an estimated $1 million was what it took to turn the houses into 21st-century architectural delights.

Using domain.com.au’s Australian Property Monitors, the houses range in price from $1.59 million to $3.3 million at the lower end, to a high of $2.1 million to $3.73 million for the most expensive listing.

The agents’ official Statement of Information required by Consumer Affairs Victoria is also included in the listing; for all five renovated homes it’s a price range of between $2.5 million and $2.75 million.

If producers decide to lock in a reserve price on each house of about $3 million, buyer’s advocate Frank Valentic says “it will be an absolute disaster for the contestants”.

Basically, they could well walk away with nothing to show for three months’ hard labour.

Mr Valentic says they may need to set more realistic reserves, given the suburb’s median price is half that, and only a handful of properties have sold for more than $3 million in recent times.

“Based on the previous shows, and I’ve bid on around 60 Block properties, the reserves would usually be at that $2.7 million to $2.8 million range given that’s the highest end of the price guides,” he told realestate.com.au.

“If it’s around there, then the contestants might come out with some money. If the reserves are over $3 million I think it will be an absolute disaster for the contestants.”

The 2022 emotional auction day

Last year, The Block opted for an ambitious tree change in Gisborne South, regional Victoria, where the show bought five 4.2-hectare blocks for contestants to renovate.

The show faced multiple challenges after the COVID-19 lockdowns, including shortages of materials and tradesmen, while bad weather created a sea of mud on the building sites.

When reserves were set around the $4 million mark, it raised questions about whether the homes would achieve those prices at auction.

On auction day, it was mostly a train wreck – only one couple walked away winners, while the remaining three passed in the homes (and sold months later).

One couple walked away in tears, with just $20,000 in prize money.

Mr Valentic issued words of warning for the 2023 auction day in Hampton East.

“They’re playing in uncharted waters at this level in that suburb, there’s only been two sales over $3 million in the last two years,” he told realestate.com.au.

“The median house price is circa $1.4 million to $1.5 million. You’re paying almost double what 80 per cent of houses sell for at that level.

“I’d be very nervous if I was the contestants going to this auction.”

Not all doom and gloom

With high interest rates and property still on the rebound after a 12-month price slump, local real estate agent and auctioneer at Marshall White, Matthew Pillios, says there’s an appetite this year for “turn-key” homes.

“The biggest advantage the contestants on The Block have this year is there’s a big desirability for turn-key homes – brand-new homes. There’s such a shortage of stock of new houses, I think this will be an advantage for the contestants compared to 2021 and 2022.”

Mr Pillios recently sold a four-bedroom house in an adjacent street, 15a Nepean Avenue, for $1.5 million.

“I’m confident with spirited bidding these will get in that $3 million zone.”

Mr Pillios, who declined to sign on as a selling agent for one couple, said that while the suburb could be “hit and miss”, the Charming Street precinct did “feel like the Toorak pocket of Hampton East”.

“There should be some buyers coming across from Hampton and Brighton East, which are superior suburbs to Charming Street because it’s close geographically.”

They could well make more than $3 million?

“There’s always a chance. It would not surprise me if they go for over $3 million. Not saying it’s a walk in the park, they look great … they should do well at auction and get them to the high twos and potentially into the threes [million],” he said.

However, with an estimated renovation spend of more than $1 million per home, does the show need to be recouping costs of about $4 million?

Mr Valentic says The Block doesn’t operate like a traditional developer.

“They are not developers, so the name of the game is not to make a development profit,” he said.

“All the major sponsors pay a bomb to be on that show, so they recoup their money from the sponsors and obviously get a lot of freebies for renovations from sponsors.

“But essentially The Block is going to be doing these renovations for free to get these properties sold.”

The price ranges listed on the domain.com.au website for each property are “calculated using lots of sources, including publicly-available data, our own price estimate model and sometimes information given to us by home owners”.

“They’re also based on the most recent sales data for the property, and other comparable homes,” it reads.

Let’s break it down.

14 Charming Street – Kyle and Leslie

The listing says the double-storey home has four bedrooms, three bathrooms and includes a self-contained studio with three parking spaces. It is on a block of land that is 605 square metres.

The agent’s price guide is between $2.5 million and $2.75 million, well below the $3 million it sold for in June last year.

Domain has an estimate of about $2.84 million, with a range from $2.47 million to $3.21 million.

16 Charming Street – Leah and Ash

Described as a modern Art Deco, offering up to five bedrooms, four bathrooms and “multi-zone accommodation”.

The agent’s price is listed at $2.5 million to $2.75 million (just one of two above the original purchase price).

Domain has an estimate of $2.12 million, with a range from $1.83 million to $2.41 million.

18 Charming Street – Kristy and Brett

This home has “the largest footprint” on The Block, with four bedrooms, four bathrooms, plus a studio.

It is offering calmness and serenity and a hint of opulence on an internal building area of 167 square metres (the block is 600 square metres).

The agent’s listed price is between $2.5 million and $2.75 million.

Domain’s estimate is $1.98 million, with a range from $1.71 million to $2.25 million.

20 Charming Street – Steph and Gian

This home has been turned into a five-bedroom, three-and-a-half bathroom “haven” on a 703-square-metre block with space for five cars.

The agent’s price guide is between $2.5 million and $2.75 million.

Domain estimates it to be worth about $3.31 million, with a range from $2.89 million to $3.73 million.

22 Charming Street – Eliza and Liberty

Last but not least, this home is described as “absolutely breathtaking” with 7-star energy efficiency, five bedrooms and four-plus bathrooms.

The agent’s price guide is also between $2.5 million and $2.75 million.

It’s one of the largest blocks of 632 square metres and Domain’s estimate is about $1.85 million, with a range from $1.59 million to $2.11 million.

Clearer?

At the end of the auction, Mr Pillios says “the market will tell us” what the properties are worth.

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