New kids on The Block are winners thanks to low reserve prices

New kids on The Block are winners thanks to low reserve prices

The  reserve prices on all four houses from Sunday night’s finale of The Block were ”excessively conservative” and bear little relationship with the current Melbourne property market, property experts say. And even the show’s executive producer, Julian Cress, admitted the reserves were set lower than for an average auction.

More than 4 million people tuned in to watch the final episode of the renovation show in which each of the four houses sold for well above their reserve, a turnaround from last year’s dismal result when three of the four properties failed to sell.

This year’s winners, Brad and Lara, from Newcastle, pocketed more than $600,000 after their South Melbourne property sold for $1.62 million – $506,000 over the reserve. They also took home the $100,000 winners prize, taking total winnings to $606,000.

Each of the other couples’ houses sold for more than $300,000 over their reserve, which a Channel Nine spokeswoman said was a ”massive result”.

She said the reserves had been set ”in the last couple of weeks” after consulting an independent valuer.

”The reserves reflect sales of other properties in the area and take into account the price we paid for the property and the cost of renovating with the intention as always to maximise what the contestants can win [rather than a return to Nine],” the spokeswoman said in a statement.

But Paul Nugent, a director with Wakelin Property Advisory, who buys and sells property in inner Melbourne, said the reserve prices were more about ensuring a good result and a big audience for the station.

”What was disclosed to the viewers as reserve prices were excessively conservative,” he said. ”But at the same time they had the desired result, which was they encouraged participation.

”The eventual sale prices were what I would have thought were the genuine values of the properties.”

Andrew Wilson, a senior economist for the Fairfax-owned Australian Property Monitors, said even though South Melbourne was one of the property ”hot spots” in the city, rising 15 per cent in the May quarter and 7 per cent since November, all but one of the reserve prices was under the suburb’s median price in May.

The reserve prices did not ”reflect market value on the day and that was proven by the result”, Dr Wilson said.

Mr Cress, The Block’s co-creator and executive producer, last night admitted the reserve prices were deliberately set lower than the normal market so that the contestants would make money.

He said the reserves were based on an off-the-plan valuation done in October before the contestants began work.

This was then adjusted in the months following to take account of fluctuations in the market.

The final reserve was set two weeks before the auction.

Source: Entertainment

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