The Block: What a shock Omar, Oz finale shows on the real estate market, according to Frank Valentic

The shocking result of The Block auction reveals the deep problems facing the wider Australian housing market, property experts have warned.

Two of the five properties up for grabs on The Block’s auction day were passed on while two of the three sold turned in relatively meager profits.

The three properties sold were all purchased by the sole buyer, Melbourne-based IT entrepreneur Danny Wallis.

Mr Wallis paid $5.6million for the winning Omar and Oz property – well above the $4-4.4million guide price in what experts described as a ‘phenomenal’ sale .

Frank Valentic of Melbourne-based Advantage Property Consulting said what happened on The Block was “reflective of the wider market”..

“Three out of five properties sold, two out of five went through, so that was a 60 per cent clearance rate,” he told Daily Mail Australia.

“In Melbourne over the last six months the clearance rate has been between 60 and 70 per cent, so I think (what happened on The Block) is consistent with market conditions.”

Dylan (left) and Jenny (right) were very disappointed that their house did not reach the reserve and was overtaken

Mr Valentic said Melbourne’s clearance rate was 80-90 per cent 12 months ago.

“So it’s become more of a buyer’s market now,” he said.

“We were in a total seller’s market 12-24 months ago with the Covid factor.”

He said there was no immediate prospect of a strong recovery in house prices.

“There will be fewer bidders at auction,” he said.

“You saw that on The Block, there were no auctions there where there were more than two to three bidders.

“Twelve or 24 months ago, when the market was flying, I would go to auctions where there were five to eight bidders,” Mr Valentic said.

Sydney-based financial analyst Martin North agreed with Mr Valentic on the state of the market.

“We are now seeing falls in all major markets and now regional markets are falling as well, so there is almost no hiding place,” he said.

“Property (sales) momentum is waning, house prices are definitely down and so (sellers) have to respond to the market.”

Mr Valentic said he will continue to be a buyers’ market until interest rates stabilize.

“I think there will be a little more pain for sellers over the next 12 months until interest rates peak and then start to flatten and come back down,” he said. -he declares.

Frank Valentic of Melbourne-based Advantage Property Consulting said what happened on The Block was

Frank Valentic of Melbourne-based Advantage Property Consulting said what happened on The Block was “reflective of the wider market”.

Omar and Oz's house (pictured) sold well above the reserve price on the day of The Block's auction

Omar and Oz’s house (pictured) sold well above the reserve price on the day of The Block’s auction

Ankur and Sharon's house (pictured) was also passed on, having failed to make the reservation

Ankur and Sharon’s house (pictured) was also passed on, having failed to make the reservation

Despite falling house prices, there will always be exceptions, Mr North said.

“As with everything, there is always a strange property that surprises us, because we still have people who have saved in the last two years thanks to Covid (lockdowns) etc. “, did he declare.

“Sometimes people want to buy not necessarily just because it’s (the right price), but because it’s actually the right property for them,” he said.

Some viewers of The Block were surprised there could be such a disparity in price between five houses on the same street in Gisborne, 55km northwest of Melbourne’s CBD.

But Mr North said properties located close to each other could have drastically different characteristics, including the direction they faced.

“Layouts can be totally different and that, naturally, can create quite a significant (price) difference,” he said.

Mr. Valentic pointed out that although the houses were on 10 to 13 acres, they were very close to each other.

“In one house there was only 40 meters to the next,” he said.

“If you’re buying a country retreat, you want secluded privacy, not seeing your next door neighbour.”

Rachael and Ryan (pictured outside their home) sold their property for $4,250,000

Rachael and Ryan (pictured outside their home) sold their property for $4,250,000

He described the sale of Omar and Oz’s property for $5.6 million as a “bizarre” outcome.

‘(It was) a result that was out of the box. I think (Adrian Portelli, one of the bidders) was also a friend of the owners. It was a bit of a weird result,” Mr. Valentic said.

“He obviously had the money to buy it, but he also pushed Danny (Wallis) way above the value of those properties.”

Mr. Portelli’s aggressive bidding meant that Mr. Wallis ended up paying $5,666,666.66 for the four-bedroom, 10-acre property.

This made Omar and Oz instant millionaires with total winnings of $1,686,666.66 – the biggest win in The Block’s 18-year history.

Tom and Sarah Jane's (pictured) home sold for $4,100,000.99 which was less than they had hoped

Tom and Sarah Jane’s (pictured) home sold for $4,100,000.99 which was less than they had hoped

Asked about the near future for house prices, Mr North said: ‘The question to ask is where interest rates will be.’

“Most people, not everyone, but most people, when they want to buy property, will need a mortgage,” he said.

“Interest rates have risen dramatically. The RBA (Reserve Bank of Australia) has said it expects inflation to stay with us much longer and interest rates will likely have to stay high.

“(For) the next two years or so, interest rates are probably going to be higher than they are today.”

He said that meant the amount of money an average person could borrow was down “about 30% from the peak”.

“This will put downward pressure on house prices,” he said.

Mr North said there were three scenarios for where the market is headed.

“The best case scenario is that rates stay below 2.95% and fall next year, and inflation falls ahead of RBA expectations, while wages rise faster and (there’s no ) no recession in Australia,” he said.

Omar and Oz are pictured outside their home, which sold for $5,666,666, well above the reserve price

Omar and Oz are pictured outside their home, which sold for $5,666,666, well above the reserve price

“The base case is for rates to rise to 3.5%, which means mortgage rates of 6-7%.

“They remain high in 2023 while inflation remains above target until 2024, and no recession in Australia.

“Worst case scenario is for rates to rise above 4%, with mortgage rates of 7% or higher, they stay high until 2024 with inflation.

“Wage growth stalls due to recession in Australia and rates fall later.”

Ankur and Sharon are pictured in their home which, unfortunately for them, did not sell

Ankur and Sharon are pictured in their home which, unfortunately for them, did not sell

On The Block, Dylan and Jenny’s house was one of two that failed to book and was passed on.

The couple were called “The Block’s most positive couple” by Foreman Keith, but Jenny was not positive about the outcome of the auction.

“I’m f***** from TBH,” she told 9Entertainment moments after their auction.

She was bitter about Omar and Oz’s winning bid and felt that they played Mr. Wallis against Mr. Portelli and managed to make a huge profit of $1,586,666.66.

“They knew Danny is very competitive,” Jenny explained.

Adrian Portelli's aggressive bidding meant the eventual buyer and The Block regular Danny Wallis (pictured right) paid $5,666,666.66 for the four-bedroom, 10-acre property

Adrian Portelli’s aggressive bidding meant the eventual buyer and The Block regular Danny Wallis (pictured right) paid $5,666,666.66 for the four-bedroom, 10-acre property

“I just feel like they were playing the game all the time and it shows. It’s not what you know, it’s who you know and obviously it paid off, didn’t it.

Jenny said she had a “hunch” it would be a lackluster outcome “the moment they sat down for the reserves”.

“I know (the houses) are worth $6 million, but people don’t have that kind of money right now,” she said.

Despite the apparent gloom heralded by results from The Block, there was a spark of light in Sydney over the weekend, where the clearance rate of 69.7% was the highest since mid-April.

Block 2022 announcements

HOUSE 1 – Tom and Sarah-Jane

Stunning architectural design meets luxurious country living.

Address: 191 McGeorge Road, Gisborne VIC 3437

List: 5 bedrooms, 3 bathrooms.

Price guide: $4-4.4 million

SOLD FOR: $4,100,000.99

HOUSE 2 – Rachel and Ryan

Luxury country living is at the heart of this beautiful, state-of-the-art winery.

Address: 197 McGeorge Road, Gisborne VIC 3437

List: 5 bedrooms, 3 bathrooms

Price guide: $4-4.4 million

SOLD FOR: $4,250,000

HOUSE 3 – Sharon and Ankur

‘Gunyah’ – Luxurious countryside with spectacular mountain views.

Address: 223 McGeorge Road, Gisborne VIC 3437

List: 5 bedrooms, 3 bathrooms

Price guide: $4-4.4 million

NOT SOLD

HOUSE 4 – Dylan and Jenny

Acreage, views and luxury country living.

Address: 225 McGeorge Road, Gisborne VIC 3437

Listing: 5 bedroom, 3 bath Price guide: $4-4.4 million

NOT SOLD

HOUSE 5 – Omar and Oz

Sustainable luxurious lifestyle.

Address: 241 McGeorge Road, Gisborne VIC 3437

List: 5 bedrooms, 3 bathrooms

Price guide: $4-4.4 million

SOLD FOR: $5,666,666