A shock revelation ahead of last night’s The Block auctions highlighted the grim reality facing many Aussie homebuyers.
It’s no secret that the Australian housing market is becoming increasingly difficult to break into, but a shock revelation on last night’s The Block finale highlighted a particularly grim reality for homebuyers.
Houses 1 to 4 were priced at a $3.5m reserve, while the reserve for Kirsty and Jesse’s larger house was set at $4.2m.
Following the revelation, host Scott Cam pointed out that no contestant in the show’s history had ever been happy with their reserve price, but conceded that all the reserves seemed far too high.
“I think they are too high … whoever set these reserves, our experts at the network, maybe they know something we don’t,” he told the contestants.
This sparked concerns that the high reserves would knock out the majority of interested buyers and the homes wouldn’t sell, with the contestants threatening to boycott the auction if the reserves weren’t lowered.
Later on, Cam revealed he had called “the powers that be” at the network and told them they had gotten the reserve prices wrong, saying he was going to “keep pushing them” until the reserves were uniformly lowered. Eventually they were each lowered by $100,000.
But even without the lowered reserves, each home would have sold well over their reserve prices.
Winners Mitch and Mark sold their property for $4,044,444.44, which was $644,444.44 over the $3.4m reserve.
All of the other properties sold between $296,000 and $530,000 over their lowered reserve prices.
Aussies being locked out of market
The finale controversy hints at a wider issue currently plaguing Australia’s housing market, with soaring prices making it nearly impossible for first-home buyers to break into the housing market.
Buyers Agent Michelle May said while a reality show wasn’t likely to be the best reflection of the wider market, property prices had been moving so quickly that the true price of a home could change dramatically from the time it was listed to the time it goes to auction.
“Having results way above what agents are quoting is very common at the moment, but then I do have to say that there can be an element of going light on quoting,” Ms May told news.com.au.
“As (price) records are being set on a weekly basis you need to, as a buyer, be very astute and look at the reality as opposed to hanging on to a price guide, which is potentially unrealistic.”
She advised potential buyers to do their due diligence when searching for a property, rather than holding on to “wishful thinking” and eventually wasting their time on a property they were never going to be able to buy in the first place.
Ms May said the current housing market was having a “devastating” impact on many first-home buyers, adding she had been having conversations daily with people who were desperate for help.
“They’ve been trying to come to grips with what has been happening and every time they’ve gotten their head around a price the market has already moved beyond that,” she said.
She said unless first-home buyers were able to get substantial financial help from parents or other relatives then it was becoming almost impossible for many to get their foot in the door.
Ms May said she didn’t think it was likely prices would drop in the near future, though she did say things could begin to slow down.
She said it would really come down to supply and demand. Prices may begin to slow down in regions where there is an oversupply of properties, but this likely wouldn’t be the case for inner city areas.
House prices could rise by $102k
Experts have forecast that Sydney house prices could rise by $102,000 next year, with a predicted 8 per cent increase taking the current median value up to $1.37m by the end of 2022.
In this month’s Finder RBA Cash Rate Survey, 38 experts and economist predicted Melbourne would experience a 9 per cent increase making houses $74,800 more expensive next year. Brisbane houses were also expected to jump up 8 per cent costing home buyers $50,000 extra by 2022.
Darwin had the smallest increase at 4 per cent meaning a jump of $24,000 to buy a home in the Top End by next year.
Meanwhile, Canberra house prices were expected to soar by $51,000, Hobart’s were predicted to rise by $36,000, Adelaide’s at $25,000 and Perth at $24,000 by the end of next year.
Graham Cooke, head of consumer research at Finder, said the current house price surge was being driven by both owner-occupiers and local investors.
He warned the reopening of international borders could push prices even higher.
“The opening of international borders, and the return of potential overseas investors, may well re-fuel the market even further,” he said.
Here’s how each Block couple ranked
WINNER: Mitch and Mark. Second at auction, $3.4m reserve, sold for $4,044,444.44. Profit: $644,444.44 + $100,000 prize money.
SECOND PLACE: Josh and Luke. Fourth at auction, $3.4m reserve, sold for $3.93m. Profit: $530,000.
THIRD PLACE: Tanya and Vito. Third at auction, $3.4m reserve, sold for $3.8m (and one cent). Profit: $400,000.01
FOURTH PLACE: Kirsty and Jesse. Last at auction, $4.1m reserve, sold for $4,401,523.67. Profit: $301,523.67
FIFTH PLACE: Ronnie and Georgia. First at auction, $3.4m reserve, sold for $3.696m. Profit: $296,000