Why didn’t the Block penthouses achieve the highest prices?

With Justin Nickerson

 
 
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Millions of Aussies were glued to their TVs to learn which team came out on top in the latest season of the Block recently.

 

Over the course of the season, we watched as the rundown and infamous Gatwick Hotel in St Kilda was transformed into five prestige apartments. 

Most of us mere mortals can only dream about having millions of dollars of publicity leading up to an auction, which guarantees strong interest from buyers.

However, that doesn’t necessarily always translate into spectacular results. 

While all five of the apartments sold under the hammer on the day, there were seemingly some concerns about drumming up enough interest for the latter auctions with a phone call reportedly put through to Hughesy to see if he was keen to buy another one!  

Not top dollar

One of the biggest talking points from the auction was the fact that it wasn’t one of the penthouses that achieved the highest price. 

In fact, it was the second-floor apartment by Sarah and Hayden that secured the highest price at $3.02 million. 

While the two penthouses weren’t too far behind, their higher reserves meant that the couples who worked on them didn’t walk away with as much prize money.

Popular opinion is usually that penthouses are worth more than other apartments within the same building because of exclusivity factors as well as generally superior views. 

This was obviously not the case, with it appearing that the retained character elements, as well as more generous floor plans, were classified as more valuable by bidders. 

That is often the case because, even though Australia doesn’t have buildings that are hundreds of years old like in the UK, we generally do value character more highly than many other attributes. 

First in, best dressed

The order of the auction might have had something to do with the results as well. 

The Block auction is unique in that it involves selling relatively similar apartments for similar price points on the same day. 

That means that serious bidders are more likely to not be overly fussed with which property they buy – they just want the chance to secure one. 

The way that plays out is that they are probably more likely to bid for the earlier apartments because they don’t want to miss out, plus they don’t want to “risk” the later apartments selling for prices they can’t afford. 

So, they jump in early and bid strongly, which soaks up a lot of the demand.

Also, there is no question that market conditions do play a part, so there may have not been many bidders prepared to pay close to $3 million to start off with. 

Given common knowledge is that penthouses are likely to sell for the most, no doubt that is the reason behind some of the bids being knocked back by the auctioneer, even though the reserve had been reached. 

The penthouses still sold, but only above reserve by a few hundred thousand dollars. 

While there has been some debate about the strategy used by the auctioneer, it is common practice when there is a strong indication that bidding will continue for some time yet. 

At the end of the day, our job as auctioneers is to get the best price for the seller and, ultimately, we do have the discretion to accept or refuse any bid for any reason.

 

Source: https://therealestateconversation.com.au/blog/justin-nickerson/why-didnt-the-block-penthouses-achieve-the-highest-prices/justin-nickerson/the