What The Block can tell us about the Property Market

by Alistair Helm in


The live auction of 'The Block' properties last night was a media success. The format of matching reality TV with home renovation and the kiwi's fascination for all things property appears to be a goldmine not only here in NZ but in Australia, the commitment is there for a 3rd season. 

As for the programme as an insight to the property market, there are some interesting pointers to reflect on. 

Firstly reflecting on the 1st series which ended in early August 2012, I wrote a couple of articles at the time examining the lessons that could be learned from the auction, the insight as to marketing properties and also the overall commercial result for the media company. 

In anticipation of the auction held last night, I was of the opinion that there might be some very disappointed participants after the auctions. I questioned whether the scale of the projects might have pushed the properties into a price bracket that exceeded the market interest and potential. I felt that last year the programme was very lucky to sell all the houses on the night - the interest in the 4th house was so weak it only just made the reserve. 

In my opinion it is very unusual to find enough active, financially capable buyers who are prepared to spend c. $1m on a house in that area in front of the media spotlight, let alone find enough buyers for 4 properties.

The result of the 4 auctions left a single indelible message in my mind - The Auckland Property Market is very strong and holds strong demand which is why the auctions were successful. 

I think that unlike last year, this year's bidders at the auction comprised 4 discrete groups who each were focused on the house that they wanted to buy, whereas a year ago the interest was far more generic to 'the houses' collectively - which is why interest declined progressively after each of the houses were auctioned.

The success for Alice & Caleb was the result of smart renovation design combined with a property with appeal that offered good space. They had a property with character (a villa), their renovation was done to appeal to a broad audience and the result showed on the frenetic 95 bids that lifted the opening offer of $700k to the successful sale at $1,126,000, $181,000 over the reserve. It was irrelevant that their house was the 3rd to be auctioned, the property had appeal.

The same is true for Alisa & Koan who also had a character property which they renovated to appeal to buyers and 22 bids after their opening bid of $700k saw it sell for $1,014,000 a margin of $66,000 over the reserve. There was genuine demand for the property even thought it was the last to be auctioned on the night.

The other 2 properties which were the first to be auctioned achieved $25,000 and $27,000 over the reserve and attracted less bids and far less frenetic bidding simply because their properties lacked the character appeal and were somewhat more individualised in decor and design. Although ironically these were the properties that probably made for better TV.

So the lessons of The Block are clear - character properties renovated sympathetically with modern convenience to appeal to the broadest audience with good size and space will always capture top dollar, particular;y in that part of Auckland. As for the 'hoopla' of the live auction, I think this year it made no difference as the buyers of these houses came to an auction committed to buy these houses, the fact that is was televised was not relevant, the strength in demand for Auckland property shows no let up as was seen last night. There were undoubtedly pospective buyers who left last night not having bought one of the houses.


What can be learnt from The Block Pt 3.

by Alistair Helm in


Transient

This post concludes the review of the TV3 series The Block. Having examined The Block as a commercial venture and the marketing of the properties, I now conclude by looking at what lessons can be learnt for buyers and sellers from the TV series.

Lessons that homeowners can take away from the show

The series, whilst at its core, is Reality TV, it does however offer some valuable insights which could be of interest and value to buyers and sellers alike.

Starting with the principle of renovating property. This show certainly demonstrated that you can add value to a property. The key thing to remember is that the amount of value you add is proportional to the value others see in the work you do. Not all work (what you do) and how you do the work (quality and style) will be guaranteed to add value.

When it comes to the latter, the quality of work, there can be no compromise as this is very clearly seen – poor paint finish, sloppy workmanship and cheap fittings tend to show and often pose the question to prospective buyers of “if they did this where I can see it, what’s it like where I can’t”?

Another key point regarding the work you do speaks to style – too much of your own personality or unique style may end up narrowing the buyer group down to just you! – the more you reflect what other renovated homes look like in the area and in the price range, the larger the buyer group will be. The tactic here is to spend time checking out other open-homes.

In terms of marketing as was covered in the previous blog post, the skill is capturing a large audience – use online premium advertising on the main sites of Trade me and Realestate.co.nz. You may be surprised that the total incremental cost for a comprehensive online campaign is far less than a single page in any newspaper or magazine and you are far more likely to see a stronger response with more buyer interest from online. You really have to ask yourself these days – why advertise in a newspaper or magazine when almost every buyer is online and being sent daily emails for new listings – so who would wait for the Thursday or Saturday edition of a paper?

Whilst thinking about online don’t forget to use social media – your own network and your friends network – just one connection removed is a vast audience so do your own marketing – free of charge.

When it came to the auction for the Block house, in many ways this was a completely unique situation for a number of reasons.

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Firstly it is almost unheard of to see 4 houses all in the same road, all next to each other, all at the same price come up for auction on the same day at the same time.

Secondly the auction itself was unique – a live auction held in front of over a million people. Auctions at the best of times are nerve racking with only 10 or 20 people attending, imagine what it must have felt like to be a bidder on the night (that partly explains the telephone bidding).

There was a very important lesson from the auction of the 4 properties though, which I think is relevant for all people looking to buy or sell. That is, there is only ever a small group of buyers for a property at a given point in time. If you look at the events of the auction night again, you will see that there were fewer bidders with each subsequent house sold, as each property sale sucked up another buyer the bidding diminished to the point where the final property of the evening only just scrapped to the reserve price.

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Be aware of this when selling your house, you want a large pool of prospective buyers and what you want to avoid is too many similar houses (style, facilities, price) at the same time as this could literally suck the wind from your sails. What you have to do, is create standout; so that your property can be seen as more appealing than others on the market at the same time. I think the collective wisdom was of the view that Libby & Ben got it right in designing to meet the perfect market demand and they scored the highest price on the night, whereas some of the other designs, whilst good fodder for reality TV were not aligned to their prospective target market.

Ultimately did the buyers of those 4 properties end up paying too much, about the right price or getting a bargain? Speaking to a colleague who knows quite a bit about renting property in Takapuna, he was telling me that based on rental rates of around $900 a week even the top priced property of 78 Anzac Street selling for $961,000 was a good buy, which makes the sale of 74 Anzac Street at $798,000 a bargain.


What can be learnt from The Block Pt 2

by Alistair Helm in


Transient

This post continues the review of the TV3 series The Block. Having examined The Block as a commercial venture, I now turn my attention to the marketing of the properties for auction once they were completed.

The Marketing of the Properties

The 4 properties were marketed for sale for a period of 4 weeks from the 9th of August and culminating in the live auction on Thursday evening the 6th September. Bayleys were the official real estate company, for which I am sure some heated negotiations and horse trading was undertaken. Certainly the profile for Bayleys in the live auction and the preceding media around the open homes etc certainly more than justified the sponsorship fee and / or the forgoing of commission on the sales.

There could not have been more exposure given to the homes in the run up to the auction, especially online. In hindsight it seems like a missed opportunity for the production company that they did not leveraged more effectively the online opportunity. The regular traffic to online real estate is huge with over 180,000 visitors per day viewing property online in this country, this was a ready audience to be primed to the show and the media exposure - maybe next time they will review this area of the profile of the show. Anyway the audience viewing the properties on both Trade me Property and Realestate.co.nz checking out the growing presentation of images of the renovated houses as they were revealed, was certainly active engaged and came in massive numbers.

Over the course of the 4 week marketing period more than 280,000 views were made of the 4 properties on Trade me Property and Realestate.co.nz.

The audience viewing the properties grew online week-by-week. The early weeks’ viewing was dominated by realestate.co.nz which capitalized on its existing audience to provide free premium advertising for all 4 properties as well as promoting the listings through an email campaign and extensive social media coverage. This resulted in more viewings on realestate.co.nz than on Trade me for the first 3 weeks, quite the reverse of the situation for normal listings whereby properties gain more views on Trade me as a function of the massive casual audience on Trade me everyday. The chart below showcases the daily audience to just one of the properties 78 Anzac Street, on Realestate.co.nz during those 4 weeks.

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Trade me did offer a premium advertising package to one of the property couples and the associated agent – with a flourish in the final 10 days to promote all the properties through advertising on the site and email campaign.

As compared to the massive viewing online the exposure of these properties offline in print media was all but non existant – a clear testament to the prioritization of online marketing .

In evaluating the marketing campaign I don’t think any vendor or agent would grumble at the scale of online viewing of 280,000 times, an open home audience of well over 15,000 and a very successful auction – well that is one way of looking at it. 

If you want to review the presentation of these homes Bayleys still have the details of each of the homes and the full images on their website here.