True Values

BY ALEX MAY

originally published in Sunday Life, February 2006

“Nowadays people know the price of everything and the value of nothing” Oscar Wilde

Prices may be in dollars but do they make any sense? Publisher Deke Miskin paid just over $26 million in 2002 to buy Sydney’s most expensive house, Altona, but surely the real value of his pile is as shelter for his family?
When a retailer couldn’t shift a swag of quality woollen jumpers that had been discounted in the bargain bin, it doubled the price and sold out in a week, according to economist Clive Hamilton.
And a hand-painted Smurf figurine that came for free with Kinder Surprise chocolate before 1990 can now fetch between $1500 and $2000 if a keen collector wants it - provided its skipping rope is still attached.
As Australians have become richer – the Australian Bureau of Statistics says the average weekly wage has grown by 41 per cent from $554.90 in February 1995 to $784.50 in February 2005 – the old economic idea that price reflects the cost of an item has been turned on its head.
Price is now a signal people use to assess the quality of an item, according to economist and social researcher Clive Hamilton. “People are prepared to pay more for a product if the price is higher, regardless of intrinsic value,” says Hamilton, who is the co-author of Affluenza: When Too Much Is Never Enough and is the executive director of the Australia Institute, a Canberra-based think tank. “Economists think that a market becomes more limited as the price goes up but today that is just not true.”
Hamilton says that despite being richer, the nation’s psychological health has plummeted with greater incidences of depression and malaise, proving the old adage that money can’t buy happiness.
Greater wealth has created a retail landscape where premium stores like David Jones snare market-leading position by associating with high-end luxury. “There’s no other store like David Jones,” says the ad for the department store with “an unparalleled stable of brands”. And now all kinds of products – from ice cream to toilet paper – have their own “luxury” niche. Sorbent silk toilet paper is “pure, soft, luxury”. Although perhaps not as luxurious as the new Sorbent Clean and Fresh moist toilet wipes.
At the same time, supermarkets sell basic food products with virtually no retail margin, preferring to offer low prices and petrol discounts to attract as many consumers as possible, according to Honeywill, who runs the Melbourne-based Centre for Customer Strategy.
Price is a topsy turvy concept in today’s wealthier world so just how can the everyday person work out the value of things?
RULES OF VALUE #1: MARKET FORCES DICTATE
“It only takes two people to want something and you have a market,” Susanne Koppon, Kinder Surprise collecter, founder GS Trading.
Susanne Koppon is sick of chocolate. Until five years ago, this German-born Queenslander used to buy between five and ten Kinder Surprise eggs each week to amass her large collection of toys, which is worth anything between $AUS10,000 and $AUS50,000.
“I have a few rare toys in the safe deposit box but I don’t have them for the value of them,” says Koppon, 43. “It’s about having something special and I don’t want to lose them if the house burns down.”
Koppon’s affection for the Kinder Surprise toy (“I love to assemble things”) drove a desire to trade the “overs” she’d amassed in the hope of finding better toys for her own collection. The only problem was finding other people who collected Kinder Surprise toys.
So in 1993 she started a website (www.gascp.com.au) listing the toys she had available to trade. That website proved so popular that she and her husband Gunter, a former IT worker, have virtually abandoned their own collecting to start a web-based business specialising in trading and retailing low-cost collectibles – everything from Lord of the Rings merchandise to McDonalds Happy Meal toys to Care Bears and Pez dispensers.
“For years I traded and swapped toys all over the world but now the business is so busy I don’t get a chance,” says Koppon, who lives in Brisbane. “I have found that people will collect everything – it’s just something that ticks in them and once there are two of them after the same thing, then it becomes a market.”
Clive Hamilton concurs with the Koppon’s Kinder Surprise view of the world – all an item needs to have a value is competition. “It’s all about supply and demand,” he says. “You only need two people to bid up a price.”
RULES OF VALUE # 2: KNOW THE BASICS
“We are looking for something more unique and worthy and rare than any other people have,” Rob Parsons, PR and marketing manager from auction house Christies in Melbourne.
Sydney-based cultural and heritage valuer Simon Storey says everything has a value. Even the rarest item that will never be sold has a dollar-price. It has to, according to Australian accounting standards that require all of our nation’s cultural goods and chattels to be valued.
Phar Lap’s heart? $1 million. The splinter of propeller from Kingsford-Smith’s Southern Cross plane? $15,000.
And the value of that same piece of propeller after astronaut Andy Thomas took it into space in 1996 “Anything between $AUS30,000 and $AUS40,000,” says Storey.
Storey makes his living valuing the collections of Australia’s museums and art galleries and “trying to keep the auditors happy” with those Australian accounting standards that require him to value the priceless.
Sometimes there is a formula to create the value – Storey is currently assessing how much it would cost to re-collect 350 body parts on loan from a museum to a university’s medical faculty.
Other items are so rare that only “gut feeling” creates the value. “With Phar Lap’s heart I had to create fair value by asking taxi drivers and men in the street what they thought it would be worth,” says Storey, who was a fine art auctioneer before he began valuing collections when accounting standards changed in the 1990s. “The valuation came from what I thought it would cost this country to wipe away the tears if the thing ever got pinched.”
Prestige property valuers like Andrew Tunbridge from Sydney’s LandMark White say while there is no science to valuing, there is a whole lot of art. “It comes down to a purchaser’s personal tastes and what they perceive as value,” says Tunbridge, who points out the fundamentals of valuing property are location, aspect, topography of the land, the architectural significance of the house and who the previous owners may have been.
“The prices are determined based on comparable sales and supply and demand – how many buyers are out there and how many properties are available for them,” he says. But even the best property – such as the Vladimir Chernov-renovated castle on the beachfront at Brighton in Melbourne – will fetch less than its “intrinsic” value if the market dictates.
Take last year’s sale of prestigious Rona, the Bellevue Hill, Sydney property of financially troubled businessman John Schaeffer. Rona was listed with expectations of $30 million but eventually sold for just over $20million, more than double the $9.6million that Schaeffer paid for the unrenovated neo Gothic mansion.
“It was well known that Rona was a forced sale and that usually warrants a discount because there are a range of superstitions that go with that,” says Tunbridge. “With high-end properties, the marketing has to be very, very discerning and it has to appear hard-to-get and exclusive.”
RULES OF VALUE #3: LOOK FOR RARITY, PROVENANCE AND PREMIUM PRICING
“We only got 14 (Chloe) Paddington bags in store and they sold out within a week even though they cost $2500 … all because Sienna Miller was photographed with one,” David Jones senior publicist Ann-Marie Kelly.

When supply and demand rules, there is one thing that will force up a price: rarity.
Koppon says the reason the Kinder Surprise Smurf with skipping rope is worth more than a run-of-the-mill Kinder Surprise toy is because it is so rare - the skipping rope is easily damaged so very few are available to trade.

And Christie’s Rob Parsons says coal hole covers – a cast iron drain at the front of Victorian-era houses – were sold for scrap until the 1990s when their very rarity made them quirky and collectible enough to start buying. Some areas of London now have problems with the theft of items like coal hole covers and drainage grates, leaving gaping holes in pavements and walls.
“Things like teddy bears were never auctioned at Christie’s until recent times as they weren’t perceived to have a value but now the record price for a teddy bear is half a million pounds,” he says.
Storey points out that provenance – the origin or story of an object and its past owners – has the ultimate bearing on value. “Tiepolo’s Banquet of Cleopatra is Australia’s most valuable painting – I would say it’s worth $200 million - not only because it is rare and beautiful but because it has a wonderful provenance having been owned by Catherine the Great.”
“A flea is just a flea, but a flea that has been owned by Charles Darwin is worth more than the flea off Spot the dog,” he says.
Often, says Storey, “you will find that collections that have been owned by someone discerning and diligent have a better provenance than something that has just been hoarded by a collector.” Storey explains that collecting is about more than just amassing objects of a certain category. “Some hoarders have no skill or dedication to collection,” he says. “A heap of scissors that have been hoarded in a box and kept in a shed is not necessarily a collection. It’s about a great collection of scissors. Does every pair of scissors tell a story?”

RULES OF VALUE #4: LOVE AND DESIRE IS THE ONLY RULE
“Price is only the cost of falling in love,” Melbourne consumer behaviorist Ross Honeywill.
Ross Honeywill is the head of the Centre for Customer Strategy, a research and marketing agency that consults to retailers and marketers on attracting high-value customers. “Price,” he says, “is just the cost of deep desire.”
Honeywill says the rise and rise of luxury is nothing more than an opportunity for people to stay one step ahead of the Joneses. ”Everyone is actually trying to work out where they stand in relation to everybody else,” says Honeywill, who has been studying consumer behaviour since the 1990s and is a former director of KPMG.
Hamilton is more blunt. He thinks humans are happy to pay over-the-odds for two reasons: they are wealthier than ever before and they just want to be loved by their status-seeking neighbours. “The irony is that it often does not work,” he says. “If you buy a red Maserati, you will probably receive more comments about what a wanker you are than how lovable you are.”


contact me alex may \| books \| property \| renovation \| magazine stories
True Values BY ALEX MAY originally published in Sunday Life, February 2006 *“Nowadays people know the price of everything and the value of nothing”* Oscar Wilde Prices may be in dollars but do they make any sense? Publisher Deke Miskin paid just over $26 million in 2002 to buy Sydney’s most expensive house, Altona, but surely the real value of his pile is as shelter for his family? When a retailer couldn’t shift a swag of quality woollen jumpers that had been discounted in the bargain bin, it doubled the price and sold out in a week, according to economist Clive Hamilton. And a hand-painted Smurf figurine that came for free with Kinder Surprise chocolate before 1990 can now fetch between $1500 and $2000 if a keen collector wants it - provided its skipping rope is still attached. As Australians have become richer – the Australian Bureau of Statistics says the average weekly wage has grown by 41 per cent from $554.90 in February 1995 to $784.50 in February 2005 – the old economic idea that price reflects the cost of an item has been turned on its head. Price is now a signal people use to assess the quality of an item, according to economist and social researcher Clive Hamilton. “People are prepared to pay more for a product if the price is higher, regardless of intrinsic value,” says Hamilton, who is the co-author of Affluenza: When Too Much Is Never Enough and is the executive director of the Australia Institute, a Canberra-based think tank. “Economists think that a market becomes more limited as the price goes up but today that is just not true.” Hamilton says that despite being richer, the nation’s psychological health has plummeted with greater incidences of depression and malaise, proving the old adage that money can’t buy happiness. Greater wealth has created a retail landscape where premium stores like David Jones snare market-leading position by associating with high-end luxury. “There’s no other store like David Jones,” says the ad for the department store with “an unparalleled stable of brands”. And now all kinds of products – from ice cream to toilet paper – have their own “luxury” niche. Sorbent silk toilet paper is “pure, soft, luxury”. Although perhaps not as luxurious as the new Sorbent Clean and Fresh moist toilet wipes. At the same time, supermarkets sell basic food products with virtually no retail margin, preferring to offer low prices and petrol discounts to attract as many consumers as possible, according to Honeywill, who runs the Melbourne-based Centre for Customer Strategy. Price is a topsy turvy concept in today’s wealthier world so just how can the everyday person work out the value of things? RULES OF VALUE #1: MARKET FORCES DICTATE *“It only takes two people to want something and you have a market,” Susanne Koppon, Kinder Surprise collecter, founder GS Trading.* Susanne Koppon is sick of chocolate. Until five years ago, this German-born Queenslander used to buy between five and ten Kinder Surprise eggs each week to amass her large collection of toys, which is worth anything between $AUS10,000 and $AUS50,000. “I have a few rare toys in the safe deposit box but I don’t have them for the value of them,” says Koppon, 43. “It’s about having something special and I don’t want to lose them if the house burns down.” Koppon’s affection for the Kinder Surprise toy (“I love to assemble things”) drove a desire to trade the “overs” she’d amassed in the hope of finding better toys for her own collection. The only problem was finding other people who collected Kinder Surprise toys. So in 1993 she started a website (www.gascp.com.au) listing the toys she had available to trade. That website proved so popular that she and her husband Gunter, a former IT worker, have virtually abandoned their own collecting to start a web-based business specialising in trading and retailing low-cost collectibles – everything from Lord of the Rings merchandise to McDonalds Happy Meal toys to Care Bears and Pez dispensers. “For years I traded and swapped toys all over the world but now the business is so busy I don’t get a chance,” says Koppon, who lives in Brisbane. “I have found that people will collect everything – it’s just something that ticks in them and once there are two of them after the same thing, then it becomes a market.” Clive Hamilton concurs with the Koppon’s Kinder Surprise view of the world – all an item needs to have a value is competition. “It’s all about supply and demand,” he says. “You only need two people to bid up a price.” RULES OF VALUE # 2: KNOW THE BASICS *“We are looking for something more unique and worthy and rare than any other people have,” Rob Parsons, PR and marketing manager from auction house Christies in* *Melbourne. Sydney-based cultural and heritage valuer Simon Storey says everything has a value. Even the rarest item that will never be sold has a dollar-price. It has to, according to Australian accounting standards that require all of our nation’s cultural goods and chattels to be valued. Phar Lap’s heart? $1 million. The splinter of propeller from Kingsford-Smith’s Southern Cross plane? $15,000. And the value of that same piece of propeller after astronaut Andy Thomas took it into space in 1996 “Anything between $AUS30,000 and $AUS40,000,” says Storey. Storey makes his living valuing the collections of Australia’s museums and art galleries and “trying to keep the auditors happy” with those Australian accounting standards that require him to value the priceless. Sometimes there is a formula to create the value – Storey is currently assessing how much it would cost to re-collect 350 body parts on loan from a museum to a university’s medical faculty. Other items are so rare that only “gut feeling” creates the value. “With Phar Lap’s heart I had to create fair value by asking taxi drivers and men in the street what they thought it would be worth,” says Storey, who was a fine art auctioneer before he began valuing collections when accounting standards changed in the 1990s. “The valuation came from what I thought it would cost this country to wipe away the tears if the thing ever got pinched.” Prestige property valuers like Andrew Tunbridge from Sydney’s LandMark White say while there is no science to valuing, there is a whole lot of art. “It comes down to a purchaser’s personal tastes and what they perceive as value,” says Tunbridge, who points out the fundamentals of valuing property are location, aspect, topography of the land, the architectural significance of the house and who the previous owners may have been. “The prices are determined based on comparable sales and supply and demand – how many buyers are out there and how many properties are available for them,” he says. But even the best property – such as the Vladimir Chernov-renovated castle on the beachfront at Brighton in Melbourne – will fetch less than its “intrinsic” value if the market dictates. Take last year’s sale of prestigious Rona, the Bellevue Hill, Sydney property of financially troubled businessman John Schaeffer. Rona was listed with expectations of $30 million but eventually sold for just over $20million, more than double the $9.6million that Schaeffer paid for the unrenovated neo Gothic mansion. “It was well known that Rona was a forced sale and that usually warrants a discount because there are a range of superstitions that go with that,” says Tunbridge. “With high-end properties, the marketing has to be very, very discerning and it has to appear hard-to-get and exclusive.” RULES OF VALUE #3: LOOK FOR RARITY, PROVENANCE AND PREMIUM PRICING* *“We only got 14 (Chloe) Paddington bags in store and they sold out within a week even though they cost $2500 … all because Sienna Miller was photographed with one,” David Jones senior publicist Ann-Marie Kelly.* When supply and demand rules, there is one thing that will force up a price: rarity. Koppon says the reason the Kinder Surprise Smurf with skipping rope is worth more than a run-of-the-mill Kinder Surprise toy is because it is so rare - the skipping rope is easily damaged so very few are available to trade. And Christie’s Rob Parsons says coal hole covers – a cast iron drain at the front of Victorian-era houses – were sold for scrap until the 1990s when their very rarity made them quirky and collectible enough to start buying. Some areas of London now have problems with the theft of items like coal hole covers and drainage grates, leaving gaping holes in pavements and walls. “Things like teddy bears were never auctioned at Christie’s until recent times as they weren’t perceived to have a value but now the record price for a teddy bear is half a million pounds,” he says. Storey points out that provenance – the origin or story of an object and its past owners – has the ultimate bearing on value. “Tiepolo’s Banquet of Cleopatra is Australia’s most valuable painting – I would say it’s worth $200 million - not only because it is rare and beautiful but because it has a wonderful provenance having been owned by Catherine the Great.” “A flea is just a flea, but a flea that has been owned by Charles Darwin is worth more than the flea off Spot the dog,” he says. Often, says Storey, “you will find that collections that have been owned by someone discerning and diligent have a better provenance than something that has just been hoarded by a collector.” Storey explains that collecting is about more than just amassing objects of a certain category. “Some hoarders have no skill or dedication to collection,” he says. “A heap of scissors that have been hoarded in a box and kept in a shed is not necessarily a collection. It’s about a great collection of scissors. Does every pair of scissors tell a story?” RULES OF VALUE #4: LOVE AND DESIRE IS THE ONLY RULE *“Price is only the cost of falling in love,” Melbourne consumer behaviorist Ross Honeywill*. Ross Honeywill is the head of the Centre for Customer Strategy, a research and marketing agency that consults to retailers and marketers on attracting high-value customers. “Price,” he says, “is just the cost of deep desire.” Honeywill says the rise and rise of luxury is nothing more than an opportunity for people to stay one step ahead of the Joneses. ”Everyone is actually trying to work out where they stand in relation to everybody else,” says Honeywill, who has been studying consumer behaviour since the 1990s and is a former director of KPMG. Hamilton is more blunt. He thinks humans are happy to pay over-the-odds for two reasons: they are wealthier than ever before and they just want to be loved by their status-seeking neighbours. “The irony is that it often does not work,” he says. “If you buy a red Maserati, you will probably receive more comments about what a wanker you are than how lovable you are.”