Every couple of years the brilliant Professor Hazel Easthope and the UNSW City Futures Institute publish the Australasian Strata Insights Report. It is important to understand just how important the data contained in this report is to the future of Queensland. We are in a housing crisis. Strata is our best chance to build ourselves out of this. Our industry is growing relentlessly, but with that comes a need to evolve, adapt, and mature. Around 14% of Queenslanders now live in strata, a figure that has jumped significantly in the last two years, no doubt driven in large part by strata’s greater affordability.
There are several important insights that I think are worth noting.
According to the report, the number of full-time strata managers decreased by around 50 (of about 850) over the past two years, whilst the number of support and other staff within strata management firms nearly doubled (from about 900 to about 1600).
This is indicative of a trend that should offer a moment of pause for all members. Clearly, we are as an industry shedding experienced, professional strata managers, be this through natural attrition or people choosing to leave the industry. And we are relying on less experienced staff.
This will have an impact on our ability as a sector to elevate to the professional level that we know is important to you. It’s both problematic but also an enormous opportunity.
Given the lot growth of 20,000 across Queensland over the reported period, and the projected lot growth of strata, the industry clearly needs more professional managers, not less. Despite a shrink in full time managers, the growth of support and other staff suggest to me a trend that we need to be mindful of. What I infer from this fundamental shift is that we are unable as an industry to retain sufficient staff for a long enough period for them to build the experience and confidence to move from assistant or entry level management roles to becoming senior managers.
Firms need more staff because they are losing experienced staff who can handle large portfolios. This appears to be fundamentally changing the nature of our strata businesses. Whilst we of course welcome new people from a variety of backgrounds entering strata, our ability to retain staff so that they become experienced leaders within their businesses and our industry is critical. Having a dearth of senior staff to support an increasingly inexperienced work force will likely be problematic for business and lot owners.
Given this appears to be a sector wide trend, there are a wide range of reasons for this, and these are not particularly isolated to any individual business or practice. Likely, it is in response to difficulties faced by strata managers, particularly related to client expectations, bullying and harassment. As more people move from detached housing to strata, expectations and understanding of what it means to ‘live in strata’ are not coming with them.
We need to work as a sector to educate owners, enhance our professionalism and promote our value proposition, so that clients understand the role of the strata manager and treat them with appropriate respect. We will also continue to push for legislated anti-bullying and anti-harassment protections.
Strata lot growth
Another trend which is obvious is the growth in lots. A growth rate of around 2% a year over the past two years, or about 10,000 lots a year. There are significant population pressures in Queensland, and it is not fanciful to suggest that this will accelerate in coming years. The issue of course remains the constraints on our construction labour supply, in the face of $89 billion in Government infrastructure spending on things like schools and hospitals, cross river rail and of course Olympics related projects.
We see that the significant demand for property in Queensland, and the drive to solve the housing crisis, will lead to appropriate investment in strata lots to help cover this shortfall, and build efficiently and sustainably. With household sizes continuing their trend of shrinking, demand for detached housing is likely to fall, as it slowly but surely has over the past 20 years or so. Hopefully the hangover of COVID related supply chain problems also begins to resolve themselves, labour supply increases for strata projects and builders can get on with the job of supplying safe, high quality strata housing to Queenslanders.
Wider sector growth
Interestingly, there has been an almost doubling of the number of professional services engagements (think lawyers, accountants, engineers) by strata communities. This is likely due to the increasing size and complexity of schemes, as well as potentially an increase in disputes brought about by COVID.
Another critical point of the report from a Queensland perspective is that for the first time, the number of lots built after the year 2000 is equal to the number built prior to the year 2000. For those ageing schemes, the maintenance bill - so to speak - is likely to be coming due. This of course is worth reflecting on in the context of increased maintenance and insurance costs and scheme termination changes.