Sunday, August 21, 2011

The shock of the Block auction

four cottages in Richmond, Melbourne before the renovation.
from w
It's hardly a laugh a minute program - one of the 'reality' programs, but 'The Block' has been a popular TV program, this time involving the renovation of four adjacent very small houses in a street in Richmond, a Melbourne suburb, once thriving with factories and cottages and mansions. My grandmother, Francis Hillman was a child in a cottage like one of these when her father was a tailor in Flinders Lane in the 1880s. Hardly the kind of house-block I would like but Richmond is an interesting suburb with excellent Chinese/Vietnamese cafes and shops and the kind of old mansions that look as if they have secrets inside.

Okay, the auction. Well, this was a laugh a minute, with the reserve prices about $850,000 and more and hardly a murmur of a bid. How crazy - these little houses with no car ports and no sense of community identity - well, there goes the neighbourhood I suppose - each for his own. With the cost of the renovation, there's NO profit to be made as THREE of the four houses did not get the right bids and were passed in. That makes the program a bit of a fizzer. As was said on the Geelong radio this morning - Bay FM - you could do a program in Geelong for a quarter of the cost! We do not have tiny houses for $900,000 here!

Meanwhile some Melbourne owners of property in Geelong seem intent on wrecking what we have here. One fine restaurant has to close because the owner puts up the rent 15% thinking an old bluestone building not too far from the waterfront is so great! A supermarket in Whittington was closed not long ago because the Melbourne owner put up the rent too high for the supermarket to continue. Money matters have taken over from human values it seems.
some comments from the media before the auction:

THE production company behind Channel 9's DIY renovation hit, The Block, is set to take a financial hit from the sale of the show's houses. The four properties in Cameron St, Richmond, will be auctioned on August 20, with agents quoting $800,000 to $880,000 for the three single-fronted residences. The double-fronted property renovated by Melbourne's Josh and Jenna is being advertised for $900,000 to $990,000.

Watercress Productions paid about $950,000 each for the dilapidated Victorian and Edwardian houses, including stamp duty.

The four couples have each spent more than $100,000 renovating the properties, though that fails to take into account the second storey added to the single-fronted houses, which would have cost upwards of $200,000, pushing their cost to around $1.25 million each.

Advantage Property Consulting's Frank Valentic said that once holding costs were taken into account, each house would need to raise between $1.3 million and $1.4 million to break even.

"There is no way they are worth that," Mr Valentic said. "It's definitely not what I would call a profitable renovation syndicate. But Channel 9 has paid a premium for their TV ratings."

Biggin Scott Richmond director Russell Cambridge, who is selling Polly and Waz's property at 37 Cameron St, said Watercress paid above the market rate to secure four properties side by side in fashionable Richmond.

"An inflated purchase price was paid to get all four properties in a row," he said.



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