Economy

The Block auction results defy property doomsayers – but did the producers cover their outlay?

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With a pace-setting $1.62 million auction sale price, Brad and Lara’s South Melbourne terrace kicked off the weekend’s four auctions – and never looked liked getting beaten as The Block 2012‘s top seller.

Being some $506,000 over the $1,114,000 reserve price, the Maitland couple took home the breathtaking $506,000 difference along with the game’s $100,000 prize.

  • Brad and Lara’s terrace (reserve $1,114,000) sold for $1,620,000
  • Dan and Dani’s terrace (reserve $992,000) sold for $1,440,000
  • Mike and Andrew’s terrace (reserve $966,000) sold for $1,400,001.01
  • Sophie and Dale’s terrace (reserve $975,000) sold for $1,330,000

Bettering the past four series – Bondi Beach, Manly, Vaucluse and Richmond – all four contestant couples won huge winnings – a collective $1.74 million – for their 10-week effort given Channel 9 gave ultra-cautious reserves given the prevailing Melbourne property market sentiment.

But with very keen bidding, almost auction fevour, among numerous prospective buyers, plenty of investors left The Block without their desired Dorcas Street acquisition despite turning up at all four Saturday afternoon auctions.

The Block 2012 auction result spoilt the dire forecasts of property crash pundits, but only one of the four terraces actually sold at around its expenditure cost.

Based on disclosed sales over the past two years in South Melbourne, two-bedroom sales have averaged $1.13 million, three-bedroom terraces have averaged $1.3 million and one four-bedroom terrace sold for $1.8 million in April last year.

It was the breadth of buyers who wanted a South Melbourne address that underpinned the prices, as opposed to the slightly trickier Richmond location. The buyers, who included neighbours, were tempted in after low reserves were mooted – and offered. There was also an ambush marketing presence from EnergyWatch’s new boss, entrepreneur Danny Wallis, best known as founder of the information technology service provider DWS Limited.

Brad and Lara’s 405 Dorcas Street terrace was the biggest offering of the four adjoining terraces at 158 square metres land. It was also the less adventurous fitout of the four.

The next best price was $1.44 million for Dan and Dani’s at 407 Dorcas Street, which had a $992,000 reserve and meant the couple had a $448,000 take-home prize.

In third place, price wise, was 403 Dorcas Street, with Mike and Andy’s offering fetching $1.4 million in the day’s final auction. It had a $966,000 reserve, with the brothers taking $434,000 home in winnings.

The bookies’ pre-auction favourite, Dale and Sophie, finished fourth with a $1.33 million sale price, which was $355,000 over its $975,000 reserve.

It was almost inexplicable, but some auctions appeared to have close to 10 or more registered prospective bidders at the onsite auctions. The speed of offers relegated those making online bids from estate agency offices well behind the auction onsite bid action.

The buyers’ agent Frank Valentic from Advantage Property, who secured the only Richmond under the hammer purchase last year, tweeted his clients had a red-hot go at both the 405 and 403 offerings.

But the bidding from others overtook them.

Before the properties went to auction Property Observer took a peek inside the South Melbourne terraces, looking at the bedrooms and bathrooms, outdoor areas and top floors, and kitchens and dining rooms.

The four terraces were bought by the production company for $3.8 million last year, reflecting a $950,000 cost before stamp duty.

The report by BMT Tax Depreciation on 405 Dorcas gave the total cost of expenditure at $721,803, totalling $1.67 million after expenditure, excluding stamp duty.

Investors could expect depreciation windfalls from the properties.

The contestants made internal renovation decisions that showed each terrace had a different layout and style.

From behind the terrace’s green door, Karl Gillon from Buxton Albert Park, which sold Channel 9 the four terraces for $3.8 million in 2010 – noted when bidding neared $1.6 million that “we are still at below cost.”

This article first appeared on Property Observer.

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