The Block moment that should scare all Aussies

PHOTO: The Block

The Block has generally ridden the wave of a strong Aussie house prices. But the results this year point to a worrying future.

When the television program The Block first hit Australian TV screens in June 2003, it helped to propel an enormous wave of home renovations and property investment that has continued all the way through to the present day.

Over the years The Block has spawned half a dozen direct adaptions across the world and more still which have put their own spin on this now well-honed formula for reality television.

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In the more than 800 episodes of the program that have aired as part of the 18 seasons on the air, the vast majority of the time it has showcased a strong Australian housing market and that – through renovations – investors could potentially make large returns on their properties.

The average auction profit from hit TV series, The Block.

Over the past decade excluding the most recent season, The Block saw 61 properties go under the hammer and 61 properties sell at auction, at an average profit of over $430,000.

During this period The Block helped to reinforce all sorts of myths and narratives about the Australian property market, whether they had a long-term basis in fact or not.

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That is until last week’s finale called some of those narratives into question.

For the first time in over a decade not all the properties up for grabs sold under the hammer at auction, with just three of the five on offer selling. Of those that did sell, they all went to one man.

That man was serial Block property buyer Danny Wallis.

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“One can only imagine what the result would’ve been if Wallis had’ve been busy on auction day.”

The Block 2022 winners walked away with a $1.59 million profit.

Yet even with Danny Wallis dropping over $14 million on the three properties that did sell, contestants Ankur and Sharon, Dylan and Jenny walked away empty-handed after their properties were passed in.

While this could change in the coming days and weeks as the properties are readvertised, it’s hard to imagine any future sales campaign rivalling the one put together by Channel 9 for The Block’s finale.

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Mirroring the broader trend

In reality, the strike rate of auctions is far below the 100 per cent success rate recorded by The Block over the 10 years prior to the current season. For the first time since 2011, The Block is arguably more representative of the trends present within the broader market of the city a given season of the program is based in.

The closest major auction market to Gisborne, Victoria, is Melbourne, where over the weekend of The Block finale under half of all auction campaigns (47.5 per cent) were successful according to data from SQM Research.

The clearance auction results for Melbourne.

Rather than acting as a glamorous microcosm of the property market, The Block’s finale instead mirrored the at times challenging reality of taking a property to auction.

For contestants Omar and Oz, they benefited from the same type of bidding war that at times happens in driveways and front yards across the nation during auction season, walking away with a $1.59 million profit.

Despite having what The Block host Scott Cam called a “virtually identical” home, contestants Tom and Sarah Jane walked away with a profit of just $20,000.

Omar Slaimankhel and Ozman 'Oz' Abu Malik

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This season, The Block delivered a challenging and realistic depiction of what it’s like to renovate a property and take it to auction in the hopes of making a life-changing profit.

It can be immensely rewarding, like it was for Omar and Oz, but it can also be risky, as it was for the three teams who would not have not yet broken even, given the time and effort they put into their properties.

Danny Wallis dropped over $14 million on the three properties that did sell on The Block this year.

It may also be worth sparing a thought for the Kiwi contestants on their version of The Block across the Tasman. Of the four teams, the total profit on their properties was just $NZ4100 ($A3732). A sponsor of the show, TSB Bank generously gifted the teams who did not make a profit or get any prize money $10,000 for their hard work.

Balancing the scales

While rising interest rates are arguably a contributing factor to the result The Block’s finale produced and have definitively weighed on the broader auction market across the nation, there is something of a mitigating factor that has acted in the markets’ favour in recent months.

Auction volumes have come down significantly from this time last year, as have new listing numbers. With fewer properties going under the hammer and fewer being listed for sales, the impact of reduced borrowing power and declining buyer sentiment driven by rising rates has been somewhat mitigated.

For example, in regional Victoria where this season of The Block was filmed, the number of new listings for October was down 11.1 per cent when compared with this time last year.

The graph shows the year-on-year changes to new listings.

At a capital city level in aggregate, new listing volumes for October are down 21.2 per cent compared with this time last year.

Sydney and Melbourne have been beneficiaries of this trend in particular, with new listing numbers down by 31.2 per cent in Sydney and 29.2 per cent in Melbourne. However, one state did buck the trend, with new listing volumes rising by 26.5 per cent in Hobart and 6.1 per cent in regional Tasmania.