What made this year's Strata Impact Conference different?
This year's Strata Impact Conference was different because, for the first time, every part of the strata ecosystem sat in the same room and admitted the same thing was hurting. Owners, managers, suppliers, academics, and government regulators shared a stage that has never before drawn this much outside attention. Managers talked about falling profits and rising wages. Suppliers described turbulence in their distribution channels and how they sell and service buildings. Academics spoke about university funding constraints squeezing the research this sector relies on. Regulators described a housing and cost-of-living crisis that now sits on their desks every morning. Different tables, different accents, same worry lines.
What do all these separate crises have in common?
All these separate crises have in common one thing: the economy, stupid, to borrow a line often, and wrongly, credited to Bill Clinton. Strip away the jargon specific to each group in that room and every complaint traces back to the same source. Managers can't lift fees fast enough to cover wage growth. Suppliers can't hold margins while their channels get disrupted. Universities can't fund the research strata desperately needs. Governments can't build enough homes fast enough to ease the pressure. None of these are strata problems in isolation. They are one economy applying pressure to five different points at once.
How bad is the squeeze on ordinary Australians right now?
The squeeze on ordinary Australians right now is bad enough to show up in three places simultaneously: household budgets, the housing market, and the first-home-buyer pipeline. Cost-of-living pressure has kept household budgets tight through much of the past year. At the same time, national house prices have recorded their first quarterly fall in more than three years, dropping in Sydney, Melbourne and Canberra as higher interest rates and affordability constraints bite. First-home-buyer mortgage applications have fallen sharply since February, which means the pipeline of new entrants who might otherwise refresh the market has stalled rather than accelerated. Prices are down. Confidence is down. The next generation of buyers is not stepping in to fill the gap.
Why is this especially bad news for existing strata owners?
This is especially bad news for existing strata owners because a falling market anda stalled first-home-buyer pipeline don't stay confined to the sale price of a unit. Owners who are already stretched by cost-of-living pressure are now being asked to fund the ordinary running costs of their buildings and, in many cases, catch up on repairs and maintenance that were left unfunded for years. Buildings still need to be kept safe and fit for purpose whether the market is cooperating or not. A softer sale price does nothing to soften the size of a special levy for waterproofing, lifts, or fire safety that should have been budgeted for a decade ago. Owners are effectively being asked to fund two bills at once: today's cost of living, and yesterday's deferred maintenance.
Read: Two Quotes, a Hope and a Prayer: Why It’s Time for Strata Managers to Get Brave About Major Repairs
What should owners and committees do about it?
Owners and committees should do about it exactly what that conference room modelled: get every stakeholder around the table, get honest about the real numbers, and stop deferring decisions that only grow more expensive with time. That means funding capital works properly now rather than leaving the next committee to explain a bigger bill later, asking hard questions before signing off on a remediation quote, and treating governance as seriously as any other line item in the budget. It also means owners need better information than they currently get, which is exactly why we built The Strata: a community giving owners and committees access to resources, benchmarks and expertise that aren't available anywhere else.
Michael Teys has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
