If you’re looking for a housing market recovery, look first for a federal election

If you’re looking for a housing market recovery, look first for a federal election

By Catherine Cashmore
Tuesday, 17 July 2012

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There may be some reservation involved when it comes to census time. Handing over details such as family income and household budgets when you’ve got no idea where the data will go once it’s been collated understandably causes hesitation. However, I have no qualms – I’m one of those annoying people who will fill out the form online before the hard copy even hits the doormat. The results simply fascinate me. They provide a wealth of information for property investors, home owners, renters, and just plain nosy citizens wanting to gain perspective on where we stand in this broad, diverse society of ours.

The results however are hardly surprising for most that keep track of price movements and pressures of affordability.  Despite the recent downward spiral in property prices, housing – particularly along the eastern seaboard – is becoming increasingly unaffordable for a large proportion of young residents.

It’s therefore no surprise to see the numbers renting across the nation increasing from 27.2% to 28.7% since 2006, with yields up by a whopping 50% (and up as high as 77% in Western Australia).

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The figures reported indicate 34.5% of 30- to 39-year-olds now live in rented accommodation and clearly struggle to save a deposit while servicing rising rental costs. Wage growth for the vast proportion of ordinary folk simply isn’t keeping pace – particularly if you haven’t got your foot on the ladder in the first place.

It’s not a case of home ownership being out of vogue, given the option between renting for life or owning, most would choose the latter. However, the debt-fuelled inflation that spiked property prices prior to the GFC, along with poor planning for population growth and other policy initiatives such as first-home owners’ grant – often laughably promoted as “aiding” housing affordability – have in turn pushed ownership off the table for a growing proportion of young residents.

Along with this data, outright home ownership is also declining. Families with children in particular are suffering – recording a decrease in their ownership rate from 79.5% to 77.2%. Other reports suggest, had ownership percentages stayed at the same level as the “peak” recorded in the 2006 census, we’d have welcomed an additional 34,000 into the property market and yet meanwhile, we hear our leaders proclaim their intention to increase the number of home owners, because if nothing else, it makes good policy speak.

The question seems to reside around whether, as a nation, we have a responsibility to provide ownership as a national right for all (importantly, low-income families) who hanker after the great “Australian Dream”. In truth, more than expressing it as such, it became viewed as such after World War II. Along with this came a range of policy initiatives intended to assist low-income households gain finance expressly for the purpose of obtaining a foothold on the property ladder. The uptake was naturally and predictably followed by a series of boom cycles buoyed on by investor speculation as most came to expect they’d retire with a property or two worth substantially more than it had been when first purchased.

However to afford the luxury of ownership, Australia’s household debt as a percentage of disposable income has sat stubbornly at around 150% for the past five years. For those unaware, this is the highest in the world.  Back in the early 1980’s, during which home ownership levels were 70.1%, household debt to disposable income was only 50%.  You can try and justify the data all you like – stressing income growth, lower borrowing costs and so forth, however it doesn’t take away the physiological impact and significant risk employed in holding such high levels of debt against residential housing – particularly in light of the GFC’s catastrophic effects both in Europe and the USA. However, from Australia’s current prospectus, a crash of similar proportions is something we’ll hopefully avoid.

So are we on our way to becoming a rental nation? Well, according to the stats, yes. Should ownership rates keep dropping at the same rate, in some 80 years’ time, 50% of Australia’s population will be living in rental accommodation – it’s hardly encouraging, is it?

An OECD report released mid last year indicated Australia is one of just five developed countries where ownership rates have fallen (along with Greece, Mexico, France and Luxembourg). However if you assess the data on a deeper level – we’re not just on a slow transition into a dominating rental market, you could equally argue we’re fast transitioning to a wandering nation of people with no fixed abode, as it seems the number of rooming houses in Melbourne alone has increased fourfold since 2006.

According to Professor Chris Chamberlain of RMIT University, there’s been a 236% increase in the number of people living in this type of accommodation since the last census. Rooming establishments are “homes” that house the most venerable – one step up from sleeping on the streets – and this data alone should wave a red flag of distress on the horizon of our sunny “lucky country” portfolio – a country with a mere 5% unemployment, loosely termed as “zero unemployment”. I should perhaps also point out that in some states, rooming and community homes are not required to meet any particular standard. Inspect a few and it soon becomes clear that comparative to Australia’s accepted standard of living, they’re “slums” for the poor.

It seems crazy that we’re in such a position considering the census data also indicates a significant rise in vacant homes – homes sitting empty, untenanted, unoccupied.  It’s worth noting, the rise from 10.4% in 2006 to 10.7% in 2011 would also include homes being renovated, sold, holiday homes, and those unoccupied on the night of the census, however there would also be a large proportion sitting vacant for no good reason, either being “land banked” or standing derelict, with little incentive from government to encourage repair.

All this aside, the total number of unoccupied dwellings officially stands at 934,471 and considering they are not all one-bedroom dwellings, this is more than enough to house Australia’s homeless. I’m not suggesting we force owners to open the doors of their empty properties to all and sundry, I’m simply stressing that the rising homeless figures sit at the bottom of a long spiral that stems from years of increasing house prices and rents, which in turn has pushed a growing minority further and further away from the security owning their own home can provide.

As for current stock on market, well SQM has June’s national total up 1.7% to 386,857 – with Hobart and Melbourne showing the biggest yearly increases at 29.4% and 27.7% respectively. For any home buyer currently shopping in inner-metro localities – areas commonly referred to as the inner and middle suburban rings of our capital cities – the levels of stock mean little. This is because the buyer market is not shopping for roof space, they are searching for quality accommodation that is suitably situated for their family’s needs. In the established suburbs, property fulfilling the current needs of home owners is not thick on the ground – especially considering most are looking with a cautionary eye on personal finance.

There was a heated Twitter debate the other week surrounding RP Data’s figures for the month of June, which indicate a rise in Melbourne’s median house price by 1%. On the back of this, REIV figures have also indicated a modest rise of 2.9% in Melbourne’s median house price for the month of June.  It’s worth noting, a rise in house prices of any percentage is not necessarily indicative of the health of the market.  Overall turnover in Melbourne – the number of sales that keep agents working, builders building and the industry as a whole ticking along – is year to date lower than it has been for the past four years. To push the point home, from an outside perspective, you could look at the worst period of the GFC in 2008 and 2009 and herald it Melbourne’s ”good times”.

However, despite the sluggish turnover rates, a rise in the price of properties that are selling would not be inconceivable. As a snapshot example, I attended five auctions this past weekend, all of which sold under the hammer with heated competition. Furthermore, all were pushed to the top end of the advertised range.  It all boils down to the one thing – the shortage of affordable stock buyers actually want to purchase.  As a case in point, the auctions I attended were:

  1. Well positioned (inner- and middle-ring established suburbs);
  2. Represented the best of their type from options currently on the market; and
  3. Were priced appropriately for market sentiment within a $350,000 to $800,000 price range (covering most dual-income households).

This aside, for a number of reasons – some of which I’ve touched on above – we have an overall reduced number of buyers in the market. However, those actively looking feel under no pressure to settle for subpar properties while the market is predominately flat. I’ve fielded an uncommonly high number of calls from developers this week seeking assistance to shift stock in outer suburban estates.  One in particular told me he’d had only one sale in three months and was now close to bankruptcy.  However despite this, the irrationality of building on the fringe continues. When will governments learn to get the infrastructure planned and financed before building their “Noddy” estates. As I’ve stressed before, every home buyer and investor survey ever conducted into housing pinpoints “good access to public transport” top of the priority list.

Although “following the population” it’s not a sure-fire way to property investment success – as I’ve addressed previously. It seems sensible to assume that a large influx of residents into one state another would indicate the potential increase in demand comparative to supply – which as we’re all aware, has an upward effect on property prices.

The census shows Western Australia is the fastest-growing state, with a whopping 14.3% of people taking residence there, no doubt buoyed on by the mining boom.  If you do a breakdown of population increases in the top 20 municipalities across Australia, 85% of them are in WA.

Not surprisingly, the mining towns in particular are suffering their own mini property boom with a population growth that can only be described as “spectacular”. According the census, the Shire of East Pilbara leads the way, housing 7,900 people aged between 25 and 44, 3,000 of which have moved in from other states – principally for the work and weather.  Of course, when the “gold rush” ends, prices in the mining towns in particular will drop.  However, historically the east and western states of Australia have always been somewhat out of sync when it comes to growth in houses.

WA in particular is coming out of a five- to seven-year period of stagnation during, which Melbourne and Sydney experienced unprecedented pre GFC growth – it would therefore not be surprising to see Melbourne and Sydney undergo their own extended flat patch as WA takes the lead in price growth. Whichever way you look at it, investors shopping in the eastern states need to be exceptionally picky with their purchases if they want to make the most of any marginal gains in the short to medium term.

Finally, the most common question I get asked is “when will the market recover?”  Well, you can digest the economics – analysing GDP, interest rates, construction data, household finance, as much or as little as you like. However it’s our politicians who have the real power when it comes to dictating market movements.  Policies such as restrictions on foreign ownership, negative gearing, town planning, grants, incentives, stamp duty and so forth play an increasing role in overall market sentiment and consequently how we choose to spend or save our money. At the bottom of it all is confidence – it’s the vital ingredient that reduces the feeling of risk while underpinning a sense of direction clearly defined by our leaders.  Therefore, if you’re looking for a recovery – look first for an election, because until we have confidence in our politicians, we won’t gain overall confidence in the market.

Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.

The unglamorous life of a real estate agent

The unglamorous life of a real estate agent

By Catherine Cashmore
Tuesday, 10 July 2012

You may have seen various job listings advertising a job in real estate as a sales agent.  They are usually adorned with wording to the effect of:

  • Want the chance of earning $100,000+ in your first year!?
  • Passionate about real estate?
  • Like working with people and have great communication skills?

They are all questions most of us would be able to answer with a positive response.

After all, everyone wants to earn a healthy wage.

Nearly all jobs require good communication skills, and as for a passion for real estate? Well, it’s quite simply essential to our daily needs!  A place for shelter, but also a place to express our territorial instincts, adorning our homes with elaborate renovations played out in both reality and fantasy – either with a trip to Bunnings or through the guilty pleasure of watching one of the many top-rating renovation shows on TV.

However, what is the life of a real estate sales agent really like?

Does it live up to the hype?

Is it possible to earn wages in excess of $100,000 working for your passion, while at the same time enjoying working in the community?

Well not surprisingly like most jobs, the fantasy is hardly representative of the experience.  It’s well known most people have a low opinion of real estate sales agents. There’s even an ad doing the rounds that states:

”My son is dead – well… he’s a real estate agent.”

Sales agents are branded as untrustworthy and “slimy”, driving around in their fancy cars, which many imagine have been purchased with overly fat commissions taken from innocent vendors for what most perceive to be minimal work.

So I thought I’d break from the norm this week and take a look at the reality behind the life of a sales agent, because once again we’ve had the annual Readers Digest 2012 list of most trusted professions released on which real estate agents barely make the cut above car sales people.  In fact they sit just one step above sex workers, which leads to the question: “why would anyone take their clothes off in front of someone they trust less than a real estate agent?”

Having worked as a buyers’ agent for many years, it’s not uncommon to get many customers signing up for the service simply because they don’t want to deal with the sales agents.  For the buyer at least, when they meet a sales agent, there’s this uncomfortable feeling they’re “out to get you” – or at least empty your wallet.  It was interesting to see an article in New Zealand’s Sunday Star Times debating whether sales agents should be required to tell the truth when representing a property to buyers. In the article, Helen O’Sullivan, chief executive of the Real Estate Institute of New Zealand, was reported making a submission to Parliament that the: “Consumer Law Reform Bill could cause ‘confusion’, rather than protect consumers”.   

It follows the premise that sales agents may not always know the truth regarding a listing with one of their agencies.  However, no one’s asking an agent to convey information they don’t know.  Even if a piece of information relayed to them by the vendor is false, it’s not lying to pass it on – it’s down to the buyer to conduct their own due diligence when it comes to assessment.  After all, few would consider splashing a couple of grand out for a flat-screen TV or laptop without doing a comparative analysis of competing offers.

Thankfully – in Victoria at least – the Estate Agents (Professional Conduct) Regulations 2008 – SECT 11, states

“An estate agent must at all times act fairly and honestly and to the best of the agent’s knowledge and ability in the performance of the agent’s functions as an estate agent.”

All this aside, all you really need to understand as a consumer is: the selling agent works for the vendor. While you won’t get lies, you won’t get the “negative” side of the story, either.  No property is perfect – beauty is firmly in the eyes of the beholder – however the sales agent is there to represent the positive, not to point out the flaws.

Is it worth coming bottom of Readers Digest polls?

Well for some, the answer is undoubtedly “yes” – however easy it’s not.  There’s no doubt sales agents are somewhat compromised through the “commission only” model – or even the current alternative “flat fee” model.  After all, they’re not going to get paid unless they sell the property – even if that means a little “vendor crunching” along the way – and in truth, most vendors have high expectations.  What’s the alternative?  Perhaps a “pay by the hour” model – pay for service, and take commissions out of the equation.

To last the road, a sales agent must build trust with their vendors.  Without it, building up a referral database (the main source of business for any agency) would be impossible.  Therefore, existing on a roll call of needless exaggerations is simply not a reasonable strategy no matter what the perception.

Not only this, the common perceptions of real estate agents not working hard are far from the mark (at least for those who desire to be successful).I’ve often pondered that the advert for employment as an agent’s representative should begin:

“Are you prepared to give up your weekends for the foreseeable future?”

Because a career in real estate – especially when you start – will ask you to do precisely that!

Saturday’s will be spent opening houses, conducting auctions (especially if you live in Melbourne or Sydney), trying desperately to tie up a deal so you can report a positive result to the boss during the traditional Monday morning sales meeting.

But it’s not just Saturdays you’ll give up.  Many vendors also expect their agents to be on hand Sunday as well!   This means while everyone else is kicking back spending time with the family in shorts and thongs (well, in the summer months anyway!), the local agent will be standing in suit and jacket – rain or shine – donning a smile and welcoming house shoppers and nosey neighbours who only get the weekends to take a squiz at their short list of homes.

But don’t agents get a week day off to compensate?

Well yes, most do, but bear in mind while the agent may have a week day reprieve, it doesn’t mean the phone will stop ringing!

A real estate agent’s business is largely conducted over the phone.  Friday may be their day off, but no one else will know it.  You may think an agent should just turn the phone off? It’s very hard to do when you work in a job solely reliant on commissions.

Turn the phone off, and the buyer calling may decide to contact someone else in the office about the house they’re interested in. If so, you won’t get the commission should they purchase.

And even worse – what if it’s someone calling for a “free” market appraisal – a potential seller? Well that’s a call you can’t afford to miss.
As for the open home, well merely conducting the operation is a joy to behold.  Most agents have as little as 15 minutes to get from one listing to another and against all odds, they can’t risk being late! (Not an easy task for anyone who may have noticed that weekend traffic is often worst than that during weekdays.)

The vendor is essentially the agent’s boss, so they won’t be happy if the agent doesn’t show up for work on time.  Especially when they’ve spent the last three hours scrubbing and cleaning in an effort to create a show home masterpiece – all for the sake of a 30-minute open.

Should an agent dare to leave more time in between opens, once they get to open number nine, they’ll be an unhappy vendor wondering why their property is not being opened until 5pm, when everyone else has knocked off for the night.

The 15 minutes must also include finding a parking spot at each end of the street and popping the “open for inspection” boards out (if you live in an area that allows them).  For the sake of timing this often requires stopping mid road switching the emergency lights on whilst struggling with a board flapping in the wind.

Struggling with the keys ,setting out the brochures and switching all the lights on – more often than not, with a queue of impatient buyers waiting outside to hand out names and numbers (which often turn out to be false) is another “perk” of the job.

As a sales agent, you’ll have to don a permanent smile while at the same time, pretending the train line running so close behind the house that the whole place rattles as it passes isn’t really a negative because you can’t hear it when the windows are shut and after all – it’s so handy being close to the station!

Situations like this are all part and parcel of the job.

Nor does an agent turn off in the evenings.  Work hours prevent most buyers from conducting private inspections during daylight hours. Yet if they’re interested enough to purchase a property, a private inspection is often a must. This means the agent will be required to work late – long after other workers have clocked off.

The agent’s mobile phone number is present on every advert – and most agencies will require the agent to use their existing mobile for business (few provide an office phone) therefore it’s also their personal “out of hours” number.

Most of us wouldn’t give out mobile numbers unless it was to a personal contact – someone we generally wouldn’t mind contacting us out of hours.  However an agent happily hands his number to hundreds of people each week knowing full well there’ll be a proportion of those buyers who’ll take full advantage of the privilege. As I said earlier – it’s all well and good turning the phone off – however miss a call and you risk missing potential commission from an active purchaser or seller.

But let’s get to the crunch – what about the $100,000+ a year wage??

Contrary to popular belief, most sales agents are on no more than $60,000/$70,000 a year, and when they initially enter the business, the starting wage is more like $30,000 to $35,000 per year.  This is because an agent typically works for a minimum retainer, which when I last checked is little more than $500 per week.

The retainer must cover most expenses, including a smart car and expensive-looking suit – (a well accepted requirement in the industry to at least give the impression of professionalism and expertise.) Therefore it will come as no surprise to learn many agents’ cars are leased, not owned, and the younger ones (in their 20s) usually still live at home.

As for the retainer, well in essence it’s little more than a loan. Once a commission is earned, any wages received in the interim will be deducted before it’s handed over to the agent.  Remember sales commissions aren’t commonly paid until settlement, therefore the lag between the accrued retainer and commission can be a number of months.

Average commissions differ from state to state and seem large to the home owner who often hands in excess of $10,000, $20,000 or $30,000 to the agency upon settlement. However the sales agent only receives a small proportion of this – often only 2,000 or 3,000, therefore considering the hours they work it’s not all that great.

Furthermore – when an agent initially starts his career in real estate, it’s not unusual for it take up to and beyond a year to consistently earn in excess of the basic retainer.  Any hint of a $100,000+ a year salary is firmly reserved for those who’ve weathered through five years or more in the industry, building up contacts and often working seven days a week in the process.

By far the greatest fear for an agent is the whiteboard at the back of the office that shows what each agent has sold or listed for the month.

If an agent falls behind on expected output, the director will start to question his use to the agency.  An agent can be sacked with as little as two weeks’ notice if the boss doesn’t think he’s “paying for his desk”.

Yet real estate is a competitive business.  It may be easy to pick up listings for the agent who’s worked in the industry for a period of years with a substantial database of contacts.  However for those starting out, often the only way to get in front of a seller is to literally walk the streets.  Knock on doors, post leaflets through letter boxes, while avoiding those with “No Junk Mail” signs for fear of upsetting a potential vendor.

Every enquiry an agent receives from a potential buyer will be followed with the desperate and hopeful question: “Do you have a home to sell?” “Do you require a ‘free, no obligation’ market appraisal?”

Anyone entering the business better have a thick skin to combat all the angry responses and disappointments.

Real estate sales is a highly competitive industry – especially in inner-city precincts.  When the initial free, no obligation market appraisal is booked in, most agents will be up against at least two competitors.  With the fear of the whiteboard ever present in mind, it’s no wonder one agent will aim to promise more than another when it comes to their estimation of the homes potential sales price (commonly known as “buying the listing”).

Once the vendor has signed on the dotted line, the real work begins.

The agent won’t get paid a cent if she doesn’t sell the property – therefore encouraging the vendor to “meet the market” (known in the business as “vendor education”), no matter what was promised prior to the contract being signed, is, of course, common practice.

Should the agent’s authority period run out on the contract (the period of time the vendor has given the agent to sell the property) before she’s managed to get both the potential buyer and seller to agree on price, then the sales agent will get nothing!

As for holidays, in the world of real estate they are few and far between.  Aside from the odd long weekend or Easter break, the main holiday period in the real estate industry is Christmas.  It’s the only time an agency can acceptably close.

Therefore, in the run up to Christmas agents will work harder than ever to wrap up sales and line up potential listings for vendors not making the pre-Christmas deadline.

The last thing an agent wants is a property looking tired as it hangs on the internet over the festive break slipping further down the default search list on realestate.com.au.

Furthermore, they’ll want to collect as much commission as possible for their own festivities, therefore, a deal done prior to Christmas means extra dollars in the holiday bank account.

All in all the life of an estate agent is a tough one, and only really rewarding for those who truly love, live and breathe property (and there are a few!).

The real dollars come years down the line once the hard yards have been walked and the reputation of ‘experience’ earned. At that stage, the agent in question is often established enough to afford a PA to conduct the weekend opens and answer all enquiries.

Therefore, next time you pop through an open home, spare a thought for the agent, who sits at the lower end of most people’s perceptions, yet lives a reality very different from what you may perceive.

All this aside – we still have to ponder if such extreme commissions are worth the work involved?  The agent may not get the dollars involved, but the agency does – and it’s no small amount.  At some point the whole role of a sales agent is going to have to be re-assessed if they’re to claim back respect from the broader community.  Perhaps “pay for service” is the way to go after all?

Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. 

The Block 2012 auction success proves that you cannot predict home buyer interest

The Block 2012 auction success proves that you cannot predict home buyer interest

By Catherine Cashmore
Tuesday, 03 July 2012

You can read all the statistics and analyse as much data as you like, but there’s no getting away from the fact that Melbourne’s marketplace is a “mixed bag”.  One set of stats will indicate a market upturn (RP Data, for example, which has recorded a 1% increase over the month of June) and another will indicate our market is still in the doldrums with clearance rates dwindling below that of the previous three years.  However, for home buyers, once they find their “ideal” house, stats go out the window and it all depends on the property.

I’d predicted a repeat of last year’s finale disappointment for The Block 2012 – after all, one place the stats all agree is on the current malaise in the million-dollar-plus market.  All agents had conveyed there was active interest in the South Melbourne terraces, however when I attended on the day, I had little conception they’d be such a high level of genuine interest. A similar number registered to last year, however unlike last year, clearly many weren’t there just to get their faces on camera.

Unlike shares, each property has to be priced on its own idiosyncrasies.  Estimating the selling price employs a number of factors, predominant of which is buyer demand. Despite the figures still indicating we have a large amount of stock languishing on the market, those numbers are being boosted by high-rise accommodation or homes in the outer suburbs – areas and properties that only attract marginal buyer interest.

Arguably, there’s not a lot for the average home buyer to choose from in the inner- and middle-ring suburbs, therefore if you do find something of quality – assuming vendor expectation is comparable to market conditions – the level of demand will be the primary indicator of the eventual selling price.  With this in mind, the first key to the success of this year’s auctions lay in the reserves, which, – including Brad and Lara’s property – had been set “under” assessed market value. Obviously Channel 9 was hedging its bets against a repeat of last year’s result

Like every other bidder attending the event, I queued up to retrieve my bidding card and conversed with others buyers who were participating on the day.  Many commented that they hadn’t assessed the contract prior to attending.  Ask conveyancers or solicitors, and they’ll confirm most contracts hit their desk after an unconditional offer has been entered into.  With so little due dilligence taken with the legal documentation, it makes you wonder how much was done in assessing reasonable market value?  The numbers registering were meant to be around 20 – however it turned out to be closer to a cosy 60.

Brad and Lara’s terrace at 405 Dorcas Street was the winner, selling for $1,629,000 with a profit of $506,000 on reserve.  The property had 3 bedrooms, 2 bathrooms, but no off street parking. The land size was the largest of the four – approximately 158 square metres.  A search through comparable sales in South Melbourne featuring the same number of bedrooms and bathrooms of a similar quality situated on roughly the same land size, and you’d be hard pressed to justify a price in excess of 1.3 million.  Furthermore, the best comparables are arguably in superior “pockets” to Dorcas Street, which carries a fair bit of traffic.

It’s yet to be seen if the properties were purchased for investment – if so, I’d suggest they’ll be a long wait until they gain on the capital outlay.  Stamp duty rates alone push the price for 405 in excess of 1.7 million.  For the same price, you could purchase a similar property in a better pocket on a larger land size.

Leaving aside individual home buyer preference, which can never be accounted for conclusively, the other three-bedroom terraces, 403 and 401, had a slightly smaller land size, giving the renovators a greater overall challenge in attracting a similar level of demand. However all achieved prices in excess of comparable value – even when you take the additional furniture into account.

The property at 407 Dorcas Street was the only four-bedroom terrace, and it “flew” at auction.  It was hard to count the number of bidders due to attempts at online bidding made available by Channel 9 for those not brave enough to openly raise a hand.  However, the online attempts could not keep pace with what was happening “in house”, with bids coming in from every corner and a price that exceeded the reserve on the opening bid.

The four-bedroom house arguably had the best floorplan and presented the best overall value for the money.  However, as I stressed previously, beauty is in the eye of the home buyer – especially in highly renovated homes.

Had one sold without the others, it would be arguable whether a valuer could justify the cost – thankfully all four achieved a consistent result.  Therefore each has three immediate under the hammer comparable sales for a valuer to work from.  But for anyone thinking it’s easy to “flip” a house, covering costs plus profit, the quote of the night must go to the Buxton auctioneer who commented toward the end of the bidding on Brad and Lara’s terrace: “I know what they spent the property, and we’restill under cost.” His comment didn’t faze the buyers, they still paid far in excess of what most would assess to be comparable market value.

As for Mr “Energy Watch” and his erratic bidding?  Well look at it this way.  He had 15 minutes of free advertising on the largest-rating TV show in Australia.  The cost of this alone would have been in excess of $1 million.  “Energy Watch” was not only trending on Twitter, it hit the headlines on every national media portal following the show.  Take all this into account and I’d suggest he got cheap advertising and a “free” house thrown in on the way! A house he could probably still sell to the under bidder should he decide to do so.

The room was laughing at him from the opening bid onwards and auctioneers, who are generally used to receiving round numbers, were somewhat stumped in their bemusement.  At 407, his initial bid (already past reserve) went unheard at the back of the room.  Therefore the opening number was followed with a bid of $920,000 from an online participant.  Once again laughter predominated. He obviously felt his unique approach was enough to faze the other participants and in this matter, his inexperience shows.  Furthermore, the online bidding was always one step behind – failing in every respect to compete with the pace. There’s a long way to go before this approach becomes the norm.

All in all, the success of this year’s finale compared with last year, I’d put down to a few factors.

Firstly – the properties were not situated opposite a multi-storey car park, supermarket and bottle shop.

Secondly – the auctions took place during the day “in house”. This meant the co-ordination between each was better managed.  Cameras moved from property to property, saving a multitude of bidders the pain of sitting through all four auctions, which last year took in excess of four hours to complete.

Thirdly – South Melbourne is a different location in every respect to Richmond.  Although the terraces were not in the best pocket of the suburb, they were situated walking distance from Melbourne’s CBD and Albert Park Lake, which clearly holds extra desirability to the average home buyer.

Finally – they were better properties!  Offering views (rooftop terrace), thee and four bedrooms, and larger living areas, they therefore attracted a wider buyer demographic.

We can only bow our heads to this year’s series and say “well done” to Channel 9’s The Block – an outstanding and unprecedented result in a downbeat market – and a wonderful success for the contestants who worked so hard to entertain us along the way!

Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.