The Block auction prices reflect market
Property investor questions auction strategyMICHAEL FIELD
An Auckland property investor has questioned whether putting all The Block houses on the market at once was the best move.
The TV3 reality show last night auctioned off the homes four pairs of competitors had spent two months renovating on Auckland's North Shore.
One of the four sellers, Wellington couple Tyson Hill and Rachel Rasch, saw their house sell at the reserve price of $789,000 - meaning they made no profit for eight weeks' work. The other competitors made profits between $11,000 and $157,000.
Auckland investor and property consultant Olly Newland wondered whether sending all four properties to auction at the same time was the best way to get the highest prices.
"That's the way the market plays, you win some, you lose some," he said.
Newland said there could have been numerous small factors behind Rachel and Tyson's fate, or it could simply have "been the colour of the card they got on the day".
Paul McKenzie, marketing manager for realestate.co.nz, said the auction showed that the buyer won. He said it was hard anywhere in Auckland to find completely renovated homes, each with $60,000 worth of new chattels, at that price.
"The bottom two houses were very good buys and the buyers have done very well."
Veteran real estate seller Anne Duncan said the hype might have helped the sale of the first house.
"I think the people that bought the first house certainly paid a premium."
So, in one auction, it can be argued, two buyers paid over the odds leaving happy sellers, while two buyers got a bargain, with unhappy sellers in their wake.
The top sale was by brother and sister Libby and Ben Crawford who sold their newly renovated property for $961,000 to take home the $157,000 profit from the sale and $80,000 in prize money.
The reality TV show aired for nine weeks following the competitors as they renovated four rundown houses.
Although McKenzie's website was not connected with the auction, it showcased the four Block homes.
They polled through the show and always knew Ben and Libby would win.
"It was pretty much Ben and Libby every time," McKenzie said.
The siblings won most of the interim prizes as each room renovation was completed and when they didn't win, on-line comments were always of the view they should have won.
Celebrity did not drive the prices, but did ensure a big turn out of serious bidders, McKenzie said.
The Block houses were getting up to 22,000 on-line views each; a nearby house on the market but unrelated to the show got just 2000 views.
Tyson and Rachel's house got the lowest number of on-line views.
Ben and Libby's house had solar panels and a state of the art kitchen, internal heating and big television.
"All of those things do add up," McKenzie said.
Unlike Newland, he did not believe having four similar houses at the same time influenced the outcome. The bottom two houses, he questioned, should perhaps have gone for more.
But the prices won at auction actually reflected what they believe was occurring in Takapuna.
McKenzie said they had determined that the truncated mean asking price (meaning the top 10 per cent and the bottom 10 per cent asking prices are excluded) was $985,000.
"Takapuna is a big suburb and includes waterside homes so what we saw last night was perfectly in the range of what I see Takapuna," McKenzie said.
"It is not mysterious. In Auckland we are at some of the highest average asking prices ever. In Takapuna that is a lot more."
Despite the price range, each of the homes was well finished and the bidders were serious.
"The biggest thing to take out of it is that every one did sell last night."
Duncan, of Anne Duncan Real Estate, said the lesson from The Block was a basic one: "I have been saying for the last four years that nothing has changed in my vocab; it's supply and demand."
Auckland was the country's only growing city, other than retirement villages in Tauranga. There was little building of new homes or units in the city but people were coming into the city increasingly.
She held 10 auctions on Wednesday - eight sold all above reserve. They have been running around 94 per cent success at auction all year.
"If you are a seller and the agent doesn't recommend auction, there is something wrong. If you don't go to auction, you will leave money on the floor."
Duncan said setting reserves was almost academic: "Reserves, where do you set them; the market is setting its own price."
Auckland's property market was being driven by lack of listings. Typically her company would have 70 to 80 houses on the books but this year was sitting on 20 to 25.
One of the houses she sold at auction on Wednesday went to a buyer who had gone to five auctions that day.
"Right now, if you are not planning on leaving Auckland, I would advise people not to sell - right now there are a not enough homes to live in."
* Libby and Ben's house at 78 Anzac Ave was the first to be auctioned. Their property, described as the best on the block, was sold for $961,000. The couple made a profit of $157,000 from the $804,000 reserve.
* Sarah and Richard's house at 76 Anzac Ave sold for $870,000. The couple made a profit of $64,000 from a reserve of $806,000.
* Ginny and Rhys' house at 80 Anzac Ave sold for $805,000. The couple made a profit of $11,000 from a reserve of $794,000.
* Rachel and Tyson's house at 74 Anzac Ave sold for the reserve of $789,000. The couple made no profit.
- © Fairfax NZ News
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