Ms Galvin, a health services professional, paid $555,000 for a two-bedroom apartment in a 90-unit development in the inner Melbourne suburb five years ago. Last year, she bought a bigger apartment, a three-bedroom, two-level dwelling with a balcony in a converted brick warehouse.
Ahead of that purchase, which cost her in the region of $1.2 million, Ms Galvin wanted to put her first apartment on the market.
"I tried to sell it, but I couldn't even get what I paid," she said. "There are just thousands going up in Collingwood. It's not unique and everyone looking for that sort of apartment wanted a newer one."
The contrast between her old apartment and the new one became apparent this week when Ms Galvin's neighbour in the 99 Oxford St building sold his own three-bedroom apartment with terrace at auction for an eye-watering $1,470,000, well above the expected $1.1 million to $1.2 million.
Her experience spells out what buyers and vendors can expect as record numbers of apartment settlements come due both this year and next across the east coast of Australia.
"Anything in a heritage building sells well, anything that's got space sells well," said Luke Sacco, the real estate agent who sold 38/99 Oxford Street. "Where there's an overstock with is the cookie-cutter, the standard 1-to-2-bedroom small apartment space. There's a lot of those available."
After funding a sustained burst of apartment developments focused on both local and foreign investors, banks - prompted in part by growth limits set by the regulator - are reigning in their exposure to that segment of the market and turning to funding developments that cater to the growing local market of owner-occupiers.
"They all are working hard to get owner-occupiers," said Angie Zigomanis, the senior manager for residential property at research company BIS Shrapnel. "Investors are subject to higher loan-to-value ratios and higher interest rates. Part of that is that APRA last year said 'We'd rather you don't increase your lending portfolio to investors by more than 10 per cent', which means if you're trying to grow more than 10 per cent, you have to look to other sectors of the market."
But it also comes as the wave of retiring baby boomers, who first turned 65 in 2011, gathers pace and begin looking for suitable accommodation in which to downsize. The buyer of Ms Galvin's neighbour's apartment was an older couple. Further, the next largest demographic group - Gen Y - is looking to buy property and is increasingly trading off space for convenience by going for apartments in locations close to transport, good food and bars.
In Melbourne, approvals of medium-density apartment developments (those fewer than 4 storeys) have picked up over the past three years across areas such as Port Phillip, Stonnington, Bayside and Glen Eira.
Sydney, with less space available for development and an apartment boom that has already extended across the metropolitan area, has less medium-density, but a flight to quality is evident as more locals look to buy apartments in higher-density developments. In November, Elaine Yong paid $715,000 for a 56-square-metre one-bedroom apartment in Surry Hills, a 2010 five-storey mixed-use development designed by architects Candalepas Associates. She had looked at a lot of apartments before she bid on the 38 Waterloo Street property.
"Many are in good locations, but always something was not quite right," said Ms Yong, who works in financial services. "The building might have a great view, but I wasn't particularly happy with the building. I wanted a building with low strata levies. I didn't see a point in body corporate fees to pay for a pool I wouldn't use."
In contrast DeNode, as her building is called, had large apartments, low running costs and met her wish for a more sustainable way of living.
"It's an apartment designed for someone with a disability - everything's really wide," she said. "DeNode uses recycled water in toilets. Because it's raw exposed concrete the upkeep is relatively low.The orientation of the apartment means it's always nice and shaded and cool. It doesn't overheat."
Real estate agent Shaun Ellis, of CPS Property Surry Hills, said the developer Haralambis Group still owned properties in the building and managed them.
"There's the upkeep and that just creates value," Mr Ellis said.
Back in Collingwood, Ms Galvin kept her original apartment, which she rents out. But the sale of her neighbour's apartment, not renovated since the original conversion a decade ago, shows she's on to a good thing with the new one.
"They got a very good price," she said.
Resource: http://www.afr.com
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