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Apartments selling best in realestate revolution

Melbourne Property

  • Apartments are outselling houses in 64 Melbourne suburbs
  • More apartments are selling compared to Houses in Carlton, St Kilda, East Melbourne and South Yarra
  • The apartment boom is evident within five kilometres of the CBD

APARTMENTS are outselling houses in 64 Melbourne suburbs as demand for smaller and more affordable housing transforms the real-estate market.

Annual sales data compiled for The Age shows a rapid change in the city's housing stock from just five years ago, when apartment sales outstripped houses in just 20 suburbs, according to the Real Estate Institute of Victoria.

Atop the list of suburbs where apartments reign are some of the most historic, such as Carlton, St Kilda, East Melbourne and South Yarra, which are better known for their streets of Victorian houses.

The change has been most dramatic in the former working-class suburbs of Collingwood and neighbouring Abbotsford, where the number of apartment sales has more than quadrupled in just five years.

Just 50 houses were sold in Collingwood in the past year, compared with 105 apartments or units.

Sales director Arch Staver, of Nelson Alexander, said Collingwood was historically an industrial area with a few modest houses.

''What we've seen in the last 10 years is the redevelopment of these large factories, with entire blocks of high-density real estate,'' he said. ''Warehouse conversions are a style of property that are snapped up immediately because it appeals to a buyer that likes to be close to town, surrounded by galleries and affordable cafes and restaurants.''

In Carlton, where apartments outsell houses by five to one, developer Michael Piccolo said he sold all but four of 49 luxury apartments in the proposed Garden House development opposite the Royal Exhibition Buildings in less than a fortnight.

''We knew we had a good site but we didn't expect 830 registered expression of interest,'' he said. ''How do you deal with that? We had to narrow it down to the first 100 and offer it to them first.''

They sold off-the-plan for between $450,000 to more than $2 million this month.

In South Yarra, where 80 per cent of residential sales are already apartments, thousands of extra people are expected to move into high rises in the developing Forest Hill precinct beside the train station within three years.

While the apartment boom is most evident within five kilometres of the central business district, units have become more popular than houses in many middle and outer suburbs.

Leading the charge for denser housing are suburbs such as Maribyrnong, Moonee Ponds, Preston and Pascoe Vale, where the number of units and apartment sold has more than trebled in five years.

It is a similar story in outer suburbs.

Head of the REIV Enzo Raimondo said demand for units and apartments had resulted in their capital growth outperforming that of houses over the past five years, with the median apartment price up 34 per cent, compared with 20 per cent for houses.

''For many, the advantages of medium or high-density living is clear: for the same price as a detached house 20 kilometres from the CBD you can live in the city close to work, entertainment precincts and parks,'' he said.

However, certified valuer Paul Menegazzo, of All Suburb Valuers, said real estate with a land component was a better investment in the long run.

''The golden rule is that land appreciates and buildings depreciate,'' he said.

by Marika Dobbin
The Age
September 16, 2009