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Ben Kingsley Blog post by Ben Kingsley

The Block Post-mortem

I wonder if the same rating success would come from a TV program built on shares as what comes from the success of a show built around renovating a property.  Short answer is no – Why?  Well in very simple terms, people can relate to it because property is a part of their lives, it’s where we grow up, where we have some of our most fond memories, where we do most of our entertaining, its style says a lot about who we are etc, etc – it’s tangible and people believe they understand it.  Although based on the strong results achieved on Saturday some might not truly understand how one property next door to three others that have been fully renovated at the same time would have such a variance in value.

 

Why is it so?

Firstly the winners of The Block (Brad and Lara) were always going to achieve the highest price because of two critical elements.

1. Land Size: Brad and Lara understood that the underlying value is in the land.  For those who have been following my property investment commentary you would recall one of the true fundamental principles that we analyze in residential property is Land to Asset Ratio.

For those new to us – What is Land to Asset Ratio? It is the percentage of land value vs. the percentage of dwelling value.  You should never buy a property if you ever want to make money on it where the Land value is less than the dwelling value you are buying when buying in a major metropolitan area.  Why? – well again keeping it simple – land appreciates and a dwelling depreciates, so the greater the demand of the land you hold technically the higher the value will go- as here in Australia we are not making any more land, so the sought after dirt on the prime locations will always get you an outperform result.

In the case of South Melbourne and the surrounding inner area of Melbourne, land lot sizes are on average small, which means the block sizes above the average size are rare in what is already a high demand area.

 

2. Floorplan: When it comes to designing a floorplan for Terrace properties the success of these style of properties will be in the balance of living space and private space.  Private space is bedrooms, bathroom etc.  These cannot be too small, as they are an area of a property that we spend a lot of time in.  Small bedrooms kill any private space appeal.  Ensuite space although desirable to have as a good size, is better to be comprised in these terrace style properties, as opposed to not having them at all.

Living space in these modern times is all about the mix of combining indoor/outdoor entertaining/living spaces.  The mix of formal living, dining outdoor and then the large rooftop terrace with city views gave the property the WOW factor, not that the others were lacking any WOW factor though.

The X factor for Brad and Lara’s terrace was the actual width of it – allowing them to provide a real sense of spaciousness that is highly sought after in a marketplace that has limited opportunity to secure a 3 – 4 bedroom, 2.5 bathroom and loads of living space.  That was the hidden lifestyle appeal of this property that got them the chocolates at the end of the day!

Knowledge is empowering – if you act on it!

 

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