The Block dud suburbs revealed: Shock data shows reno risks

News.com.au

a day ago

The Block's horror track record at picking suburbs for its high-profile flips has sparked warnings would-be renovators could risk vast sums of money following their lead.
New analysis of median prices in the year leading up to the show's auction days for the past 17 seasons shows homes in seven of the suburbs were losing money months before contestants picked up a paint brush or emotionally abused their partner.
In ten of those seasons, the show's selected suburb was significantly outperformed by the wider Melbourne or Sydney market, depending where it was located.
And it appears their latest destination in Daylesford is on track to join the list of money-losing suburb choices.
Latest figures show the suburb's $818,000 median has dropped $72,000 in the 12 months to the end of June.
On Phillip Island last year, price records show that in the 12 months it took the show to go from buying its Cowes site to hosting the auctions in November, the median house price had tumbled $35,000 (4.5 per cent) to $750,000.
And by the time the show's Hampton East auctions were held in November 2023, the local median price had dropped more than $100,000 — despite the figures used to calculate that median including The Block's sales.
One of the homes purchased by high profile billionaire Adrian Portelli has already gone on to sell for a more than $1m loss.
Median price reductions typically reflect a reduction in the majority of home prices in an area, including higher-end offerings like those on The Block.
The reality renovation show has also been criticised for over renovating to the point where homes are sold far below what the updates would cost, as well as for its impossible time frames and unrealistic auction results.
Depreciation schedules calculated for the last season of The Block by quantity surveyors BMT showed all of the homes would eventually allow an investor to claim more than $4m in tax deductions as the value of the materials and fixtures added during the renovation declined.
The highest price paid was $3.3m, but the rest sold for less than $3m, indicating the properties were overcapitalised by close to $1m.
With another season commencing, property, building and renovation experts have advised anyone inspired by the reality TV program to watch Grand Designs or to head to social media or YouTube for a dose of renovation before starting their own attempt.
Prominent buyer's agent Cate Bakos said after more than a decade, only picking 60 per cent of suburbs where values rose wasn't a good strike rate, and in many instances it should have been clear they wouldn't perform well.
Ms Bakos said more recent choices to centre the show in regional Victorian townships including Phillip Island and this year's season in Daylesford had gone against wider trends of the state's regional holiday home hotspots' values facing a protracted down turn — and anyone looking for a flip should consider similar areas with caution.
'Buying near the peak for the regional areas is a bit silly,' Ms Bakos said.
'We had crazy growth during Covid, so I wouldn't have chosen regions as a location for The Block.'
The prominent buyer's agent said it was important those considering a renovation while watching this season should be very conscious that the homes were heavily overcapitalised, and warned their auctions were unrealistic.
'I would argue that it's all questionable,' Ms Bakos said.
'Watch Grand Designs — that's a better insight, I think, than The Block into what can go wrong.'
Real Estate Institute of Australia president Leanne Pilkington said anyone getting ideas of flipping homes from The Block needed to remember 'the whole purpose is to entertain'.
While the show did face additional challenges with the need to find a site where at least five similar properties could be worked on by contestants, Ms Pilkington said others needed to 'be much more discerning'.
She added that building industry members she knew couldn't watch the show without 'getting very frustrated with it'.
Despite this, Ms Pilkington said those looking for a bit of inspiration and the latest trends could potentially draw on features and advice from the judges in the reveal episodes.
Her advice for picking a winning area to consider flipping a home in was to focus on homes closer to the median house price, those near public transport and key amenities such as hospitals and major shopping centres.
'And it's absolutely better to go for a middle of the road property,' Ms Pilkington said.
Property Developer Network founder Rob Flux has been helping amateur property developers and flippers, tackling similar sized projects to The Block, for a number of years.
Mr Flux said he had gone up against The Block's producers as a prospective buyer for a property in the past, and had been told their offer for it was about $2m above his own.
'They are overpaying in all departments,' he said.
'And, I don't know if it is by design or by coincidence, but they are going into areas that aren't growing, and sometimes where the market is going down.'
While this might help them find properties that suit their needs, Mr Flux said it was not ideal.
However, he noted the bigger risk was following their approach to renovations.
'Despite the fact that it's called reality TV, there's nothing real about it,' Mr Flux said.
'It's extremely rare for anyone to live on site and work for eight weeks.'
Instead, he advised a more practical approach starting with understanding what was missing but likely to soon be in demand in an area, working out what buyers would pay for it and then calculating if there could still be a profit — factoring in a buffer in case the market doesn't rise.
'Then, if the market goes in your direction and it works well, you will double your profits,' Mr Flux said.
Caitlin Hamston and her partner Scott have flipped or built four properties across Melbourne's inner west over the past nine years.
On two occasions they've lived in the homes during the renovations, a process they wouldn't recommend for anyone with kids.
While they stick to areas they know, they will even give these a miss if conditions aren't right.
'If it was going backwards, we would avoid it,' Ms Hamston said.
Her advice for would-be renovators was to find areas where prices look likely to rise, pick streets with a good feel to them, then look for blocks that don't have constraints that would impact extensions or a new home build.
Ms Hamston also advised against getting caught up with luxury finishes, and to look for affordable alternatives wherever possible.
'Otherwise, it defeats the whole purpose if you are trying to renovate and sell for a profit,' she said.
She also advised against expecting to complete renovations quickly, with her and her partner's typically taking two years to turn over each of their four builds to date.
While Ms Hamston does own a building company, which has made their work easier, she said they had been noticing trades were becoming easier to engage in the past few months.
Along with interest rate reductions helping to limit holding costs for loan repayments, she said now could be an opportune time to consider trying a renovation project.
Expert Advice For Flipping Properties
– Focus on areas you know with good amenities, schools and transport;
– Work out what housing an area is missing, who will buy it and what they will pay;
– Calculate a budget based on what buyers are likely to pay;
– Aim to be selling a home close to the suburb's median price, to ensure the most potential buyers;
– Expect to make mistakes and budget for them;
– Consider potentially hidden holding costs including land tax, interest rate repayments and energy bills for the site;
– Budget for realistic time lines to complete work;
– Don't assume that lots of other people doing a particular type of home flip or development in an area means they are making a profit, check your own numbers;
– Look for areas with high street appeal, then look for homes or blocks without easements or issues that could hamper your plans to renovate;
– Get good trades around you that are reliable;
– Consider higher cost improvements such as updating the facade and even adding a pool, if there is advice it will help boost a sale;
– Avoid properties with low-return repairs needed, such as those that require underpinning;
– Explore YouTube channels and even social media for advice from qualified builders and trades, not 'reality' TV;
– Don't rush into things;
– Try engaging with local community property development networking events;
Sources: Property Developer Network's Rob Flux, Buyer's advocate Cate Bakos, serial flipper Caitlin Hamston
THE BLOCK SUBURBS' TRACK RECORD
Daylesford, 2025 (The Block auction to be held November)
Median house price 2025 (June): $818,000
Median house price 2024 (June): $890,000
12-month change: -$72,000 (-8.1%)
Melbourne average change: -$1106 (-1.3%)
Phillip Island, 2024 (November)
Median house price 2024: $750,000
Median house price 2023: $785,000
12-month change: -$35,000 (-4.5%)
Melbourne average: $0 (0%)
Hampton East, 2023 (November)
Median house price 2023: $1,437,500
Median house price 2022: $1.55m
12-month change: -$112,500 (-7.3%)
Melbourne average: -$30,000 (-3.3%)
Gisborne, 2022 (November)
Median unit price 2022: $1.2m
Median unit price 2021:$935,000
12-month change: $265,000 (28.3%)
Melbourne average change: $43,000 (5%)
Hampton, 2021 (November)
Median unit price 2021: $2.33m
Median unit price 2020: $1.903m
12-month change: $430,000 (22.4%)
Melbourne average change: $111,000 (14.8%)
Brighton, 2020 (November)
Median house price 2020: $2.71m
Median house price 2019: $2.545m
12-month change: $165,000 (6.5%)
Melbourne average change: $26,000 (3.6%)
St Kilda, 2019 (November)
Median unit price 2019: $528,809
Median unit price 2018: $514,000
12-month change: $14,809 (2.9%)
Melbourne average change: -$20,000 (-3.5%)
St Kilda, 2018 (October)
Median unit price 2018: $525,000
Median unit price 2017: $542,500
12-month change: -$17,500 (-3.2%)
Melbourne average change: $21,200 (3.9%)
Elsternwick, 2017 (October)
Median house price 2017: $1.87m
Median house price 2016: $1.605m
12-month change: $265,000 (16.5%)
Melbourne average change: $25,000 (4.8%)
Port Melbourne, 2016 (November)
Median unit price 2016: $643,750
Median unit price 2015: $652,500
12-month change: -$8750 (-1.3%)
Melbourne average change: $20,000 (4%)
South Yarra, 2015 (November)
Median unit price 2015: $590,000
Median unit price 2014: $560,000
12-month change: $30,000 (5.4%)
Melbourne average change: $26,500 (5.5%)
South Yarra, 2015 (April)
Median unit price 2015: $577,800
Median unit price 2014: $552,000
12-month change: $25,800 (4.7%)
Melbourne average change: $18,100 (3.9%)
Prahran, 2014 (October)
Median unit price 2014: $504,000
Median unit price 2013: $522,500
12-month change: -$18,500 (-3.4%)
Melbourne average change: $27,000 (6%)
Albert Park, 2014 (April)
Median unit price 2014: $701,000
Median unit price 2013: $430,000
12-month change: $271,000 (63%)
Melbourne average change: $29,627 (6.8%)
South Melbourne, 2013 (July)
Median unit price 2013: $511,000
Median unit price 2012: $535,000
12-month change: -$24,000 (-4.5%)
Melbourne average change: $40,000 (9.2%)
Bondi, 2013 (March)
Median house price 2013: $1,567,500
Median house price 2012: $1,247,500
12-month change: $320,000 (25%)
Sydney average change: $42,000 (7.4%)
South Melbourne, 2012 (July)
Median house price 2012: $894,500
Median house price 2011: $985,000
12-month change: -$90,500 (-9.2%)
Melbourne average change: -$15,000 (-3%)
Richmond, 2011 (August)
Median house price 2011: $845,000
Median house price 2010: $805,000
12-month change: $40,000 (5%)
Melbourne average change: $35,000 (7.6%)