Why the Block NZ flopped, and the Block Australia continues

That’s not to say all the houses on The Block Australia 2022 sold with record profits – other homes passed in on auction night and the Australian housing market is also in the midst of a downturn – but compared to New Zealand the trend is for Australian contestants to make much, much more than their Kiwi counterparts.

In New Zealand, Warner Brother’s Discovery has announced the show won’t be returning in 2023 due to the country’s “challenging housing market”. Senior director of production, Vicki Keogh, said in a statement that the show was “incredibly” important in the schedule but they wanted to give contestants the best possible chance of success.

“We’ve been monitoring the housing market very closely and due to the ongoing challenges that are occurring, we have made the tough but necessary decision to postpone the show to 2024 to give contestants and the show the best chance of success,” she said.

The Block: Redemption ended in heartache for many of the contestants. Chloe Hes and Ben Speedy’s house fetched $1.145 million at auction, just $4000 above the reserve, while the runners-up, Maree and James Steele, sold their home at auction for $1,152,100, just $100 above the reserve.

Stacy and Adam Middleton, who earned nothing from their first appearance on The Block, walked away with nothing for a second time after their house sold after the auction at the reserve price of $1.148m, with the surprise twist being that the couple bought their own house.

Chloe Hes and Ben Speedy, the winners of The Block NZ season 10, won a $100,000 cash prize and $4000 in auction profit. Photo / Discovery

Shocked: The Block NZ contestants Quinn and Ben Alexandre get emotional as their house passes in at auction during the show’s grand finale. Photo / Discovery

The house that Quinn and Ben Alexandre worked is back on the market after a post-auction deal fell over.

Orewa Mike Pero owner Lane Sanger, whose patch featured in this year’s show, told OneRoof the news that The Block wouldn’t be back in 2023 wasn’t a surprise. “The market’s been the toughest it’s been since the GFC,” he said.

But Sanger also noted that the show’s decision to go with townhouses in the hills of Orewa, on Auckland’s northern fringes, was the wrong one, and had put too many limitations on what the contestants could achieve.

“It’s a tough one because the market overall is not an easy market and when you’re trying to pitch something where there is plenty of choices of it makes it very hard to get premium prices. In any market any property will sell but in a cooler market townhouses are harder to sell.”

When The Block had options for contestants to knock out walls and redesign layouts there was better potential, Sanger said, adding that the lack of parking in the area chosen was always going to be hard sell.

Sanger said the show had failed to make use of Orewa’s best feature – the beach. “That was probably for me a key thing. If they’re going to have it in Orewa somewhere central, closer to the hub of activity, that’s where they needed to be,” he said.

Back on the market: one of the townhouses that featured in this year’s The Block NZ. Photo / Supplied

Grand scale: The winning house for this year’s The Block Australia. Photo / Domain

In Australia, the locations chosen are usually premium suburbs and the houses are on a sometimes dramatically bigger scale to the Kiwi ones. In 2022, the Australian contestants had 10-acre blocks in a luxury destination in Gisborne, Victoria, to play with.

Back in 2020, when The Block NZ was delayed due to Covid, OneRoof and data partner Valocity looked at the difference in the auction profits made by contestants and found for the New Zealanders the average, since 2012, was NZ$95,000 while the average for the Australians was 128% more at $NZ440,788.

When the homes from the delayed 2020 series in New Zealand did sell the next year during the Covid house price boom they bucked the usual trend and made unusually high gains for the players, averaging over $500,000 in auction profits.

But mostly the Kiwi results have been ho hum. The Block NZ winners Chloe Hes and Ben Speedy walked away with just $104,000 in prize money this year, while The Block Australia’s 2022 champs, Omar and Oz, won a record-breaking A$1,686,666.66 (NZ$1,822,448.36) after their five-bedroom house in Gisborne, Victoria, sold under the hammer for A$5,666,666.66 – A$1,586,666.66 over the reserve of A$4.08m. The winnings are the most ever handed out in the Australian show’s 19-year history.

The Block Australia 2021 winners Mitch Edwards and Mark McKie. The pair took home A$744,444 in prize money. Photo / Getty Images

Orewa, though, has a population of just over 10,000 people whereas the population of the Macedon Ranges, about an hour from Melbourne, is around 46,000 people, and the scale of the homes was huge compared to the Orewa terraces.

The Australian makers of the show reportedly bought around 70 acres and then relocated do-up homes onto the sites for the contestants to rebuild and renovate. Each couple had 500sqm homesteads to work on complete with tennis courts and pools on 10 acres of land each, the “biggest properties in Block history”, according to www.blackbox.com.au.

OneRoof spoke to Nerida Conisbee, chief economist for Ray White Australia, prior to the news the Block NZ was being postponed and she wondered if the New Zealand version had been located in a suburb like Herne Bay or Remuera – two of Auckland’s most expensive –the result might have been different.

People who buy in those sorts of suburbs had deeper pockets and relied less on debt to fund purchases, she said.

The booming housing market in 2021 would have made a difference to the Kiwi auctions that year but the market in both countries was a lot weaker in 2022, yet The Block Australia still did much better.

Conisbee said one of the reasons was probably that in Australia there’s still a big demand for homes outside of the suburbs and in regional areas, and there’s still a big demand for large homes on big blocks of land. “I think if the properties had been apartments, for example, I don’t think they would have seen such great outcomes here in Australia.”

The Macedon Ranges are not that far from the city where people go for weekends or to buy or build big standalone homes on large acreages. “I think that helped so even though the market is pretty weak at the moment it’s just a highly desirable area.”

In Australia all the series have been filmed in premium suburbs, in places like Bondi and South Yarra – suburbs, Conisbee, said would be considered among the best in Australia.

Bondi, in Sydney. The Block Australia has featured the suburb twice in its 19-year history. Photo / Getty Images

St Kilda, in Melbourne, was the location of The Block Australia in 2018 and 2019. Photo / Getty Images

“They haven’t done any secondary suburbs here in Australia. Property is so much about location so if you choose premium suburbs and you put a really nice house in a premium suburb unless the house is really weird it’s going to get a pretty decent price.”

Another factor is size – with 20 million-plus people Australia simply has more buyers and more people with money.

“If you’re spending A$5.7m (the price for the winning house in Australia) you’re obviously pretty high net worth to begin with and potentially may not be borrowing much money anyway.”

Real estate agents in New Zealand recently told OneRoof the show in this country would be better served if it returned to its earlier format, where contestants had to renovate old homes rather than just “decorating” cookie cutter new-builds, with regional real estate bosses pointing out there were plenty of older homes in places like Tauranga, Hamilton and Christchurch.

Prior to the postponement OneRoof asked Warner Bros. Discovery for its views on the differences in the budgets and approach of the shows in the two countries but the media company declined to answer.

It said through a spokesperson: “While there is no doubt that the challenging housing market was reflected in the auction results of The Block NZ this season, we are incredibly proud of the homes our teams created and for the homes sold.”

The Block NZ 2023 will be replaced by a local version of House Rules.