Why the ‘ugly cousin’ of property urgently needs more attention

Chris Miller 27 July 2020 23

Canberra is leading the trend in apartment living, but are we prepared to manage it? Photo: File.

Nearly 20 per cent of all ‘households’ in the ACT are not, in fact, in houses at all.

And it’s estimated that during the 2030 decade, half of all Australians will reside in apartments and Canberra is leading the trend, but we’re completely unprepared as an industry.

The strata sector is still behaving as though the landscape consists of petite unit buildings with quaint lawns and two flights of stairs that need cobwebs swept away periodically.

The word strata, up until 20 years ago, largely referred to two and three storey buildings with a small number of residents. Today, we’re effectively building massive communities within suburbs.

One-in-10 people in the ACT now lives in an apartment or townhouse. That’s nearly 40,000 of us. I’m one of them.

Our young professionals, who are most likely to live in apartments, make up 62 per cent of the occupants.

Couples with no children make up 26 per cent of the unit residents, and singles another 39 per cent.

Families are taking to apartment living too. We know this because children, or at least under-20s, make up 11 per cent of the apartment population here. Couples with children occupy 9 per cent of apartments in the ACT and single parents occupy another 4 per cent.

So apartment living is a part of modern life in the nation’s capital. But little is properly understood about the needs of people and communities choosing strata living.

The UNSW City Futures, Australasian Strata Insights Report, is about the only decent detailed analysis reports ever produced on the Australian strata sector.

That alone is concerning. And the lack of decent analysis means we’re lagging decades behind on national regulatory frameworks as a result.

Economically speaking, this industry generates more than $6 billion annually just in sending out tradespeople, cleaners and all the rest of it. Another billion-plus dollars a year is generated through the engagement of accountants, lawyers and other professional services.

The sector also accounts for more than a trillion dollars of property value. I don’t mean real estate value. I mean actual replacement insurance value – bricks and mortar. And who are the custodians of a trillion dollars of replacement-insured property value? The custodians are, more often than not, volunteers.

Without dissecting the national state of professional standard requirements, I am prepared to go on record as saying that a national standard is urgently required for the industry, which is ever increasing in complexity.

Why? Because once upon a time the national average number of units in a strata scheme was about 12. The vast majority of this sector was made up of really little apartment buildings, two and three story walk ups, but that low average lot number is no longer indicative of the strata world of today.

In some of the really small buildings, the strata manager is not much more than a mailbox, and that model worked well enough in the past, even if service levels and the reputation of the strata management industry weren’t stellar.

These days it is not uncommon for a strata manager to be responsible for a building with several hundred units that, for example, will have multiple basements, a natural spring running underground with two pumps to prevent flooding, HVAC contracts, 1851 Fire Compliance, and more than a dozen other building standards or best practices.

The strata industry is currently in the midst of an awakening as the requirements of the relevant strata legislation are being challenged by the physical needs of the buildings that the same laws presume to protect.

No one’s ever really paid much attention to the strata management industry, and that’s about to become a problem. The strata sector is profoundly influencing our social and economic landscape. The reality is that we have to start talking about it. The industry is growing faster than our determination to put regulatory frameworks in place to protect both residents and investors.

Strata is the ugly second cousin of property: it’s easy to look at it for what it isn’t. Just ask your friendly local commercial or residential real estate agent. But the opportunity that exists within this sector of property is really exciting if we can be bothered to take the time to know it.

Chris Miller is managing director of Vantage Strata, National Council Member of Strata Community Association, and current president and founding member of the ACT chapter of Strata Community Association.


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23 Responses to Why the ‘ugly cousin’ of property urgently needs more attention
Amanda Evans Amanda Evans 3:06 pm 28 Jul 20

Currently there's a 34% slump in apartment sales nationwide!

Amanda Evans Amanda Evans 3:04 pm 28 Jul 20

So based on these statistics 80% of people don't live in apartments!

Bethany Williams Bethany Williams 8:20 pm 27 Jul 20

Apartments cost too much after you move in with the high body corporate costs.

Marc Edwards Marc Edwards 5:33 pm 27 Jul 20

Strata, the overpriced component of owning a unit, generally due to real estate/strata management fees.

Brisal Brisal 10:14 am 27 Jul 20

Most complexes seem to be run by companies where the strata “manager” is someone whose last job was to look after rental properties, and we know how compentent most of them are. Usually it takes threats of legal action against them to get anything done.

William Parker William Parker 9:48 am 27 Jul 20

Start building complexes that house real 3-5 bedroom, 2 bathrooms, 2 car park, apartments and stop building complexes with units inside.

Some are built this way, but not enough, this is price gouging the market for appropriate housing.

    Elroy Jones Elroy Jones 7:50 am 28 Jul 20

    William Parker no one buys them. They’re too expensive against cost of a block

    William Parker William Parker 8:27 am 28 Jul 20

    Elroy, that’s what I mean, they don’t have to be marked up so high, it’s robbery.

Judy Diamond Judy Diamond 8:51 am 27 Jul 20

Most are hideous and not fit for purpose. Worst examples are in the molongolo valley, Wright etc. Slums in the making

Paul Irving Paul Irving 8:52 pm 26 Jul 20

Strata is where the tragedy of the commons comes home to roost.

Monica Tiffen Monica Tiffen 8:24 pm 26 Jul 20

Most people want Homes!

    Ashley Wright Ashley Wright 9:42 pm 26 Jul 20

    Monica Tiffen I assume you mean houses as an apartment can be a home.

    But as for your statement you are probably right most probably do want houses but an increasing number of people do want apartments too. The question is what is the ratio to meet demand and also be sustainable.

    Elroy Jones Elroy Jones 7:48 am 28 Jul 20

    Monica Tiffen most people can’t afford stand along ‘homes’ and we don’t have enough space to build them.

George Watling George Watling 8:23 pm 26 Jul 20

I agree with Stu McRae one outcome of the virus disaster should be a move away from these high density living arrangements.
There are studies now that show that people in tall buildings may be more at risk of infection during pandemics
https://theconversation.com/coronavirus-people-in-tall-buildings-may-be-more-at-risk-heres-how-to-stay-safe-135845
https://www.afr.com/property/residential/call-for-apartment-guidelines-to-contain-virus-20200327-p54emi?

Stu McRae Stu McRae 6:37 pm 26 Jul 20

Perhaps one outcome of the virus disaster should be a move away from these high density living arrangements.

    Elroy Jones Elroy Jones 7:47 am 28 Jul 20

    Stu McRae in preference of expensive urban sprawl? Those days are done Stu

    Amanda Evans Amanda Evans 3:02 pm 28 Jul 20

    Elroy Jones no in preference for medium density where you can actually have a little private open space, grow some veggies and sit under a tree.

    Elroy Jones Elroy Jones 12:32 pm 31 Jul 20

    Amanda Evans totally agree there is a greater need for medium density in Canberra Amanda. Not sure it would have any more positive impact than high density though.

Kriso Hadskini Kriso Hadskini 4:39 pm 26 Jul 20

My elderly mum lives in a dysfunctional strata in Sydney. I think stronger laws need to be made to protect the elderly and disabled in strata schemes, as currently strata managers and committees can ride roughshod over strata members if they are morally bankrupt. Which most are. My experience of fixing things for her are that the cultures of both ageism and misogyny are alive, well and thriving and causing misery.

Acton Acton 12:55 pm 26 Jul 20

Writers of these articles should explicitly articulate their point. In this case the writer, a strata management representative, is suggesting that strata owners are not competent to manage their own affairs and should be compelled to employ professional strata management services. That might sound like a good idea to strata management providers, but is another level of regulation and cost to be imposed on apartment home owners, already hit with numerous costs and rate increases. The result would be a further decline in housing affordability.

Tan Choi Heng Tan Choi Heng 11:20 am 26 Jul 20

Brad Fraser a need for a degree programme on property development and management?

    Annie Wyer Annie Wyer 12:46 pm 26 Jul 20

    Tan Choi Heng it will be a very good occupation to have. Already the ACT has a lot of apartment complexes and the complexes are getting larger with every new build. A lot of people buying into those complexes don’t even realise the behind the scenes workings that keeps those buildings functioning properly. The good thing the ACT government has taken on as a priority is appointing independent certifiers - that will go a long way to stopping shoddy workmanship.

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