The uptake of strata living in Australia and New Zealand is continuing to grow, a new report has found.
Prepared by UNSW City Futures Research Centre in conjunction with strata management industry body Strata Community Association, the 2022 Australasia Strata Insights 2022 Report provides a snapshot of the strata industry across Australia and New Zealand.
All up, the report found that the number of properties which are covered by a strata scheme has increased by seven percent over the past two years.
Based on conservative estimates, it found that more than four million Australians or 16 percent of the population lives in strata-titled properties. This includes more than 2.5 million who live in apartments along with 1.5 million who live in other strata dwelling types (units, townhouses etc).
Moreover, the report stresses that this is a conservative estimate. Indeed, it says the number living in strata could be as high as 26 percent.
The report also found that:
- There are now more than three million strata and community-titled lots (units, townhouses etc.) in Australia.
- Strata-titled properties have an estimated insured value of almost $1.3 trillion.
- Each Australian state and territory, along with NZ, experienced growth in strata lots over the last two years.
- More than 200,000 new lots (units, townhouses etc.) were created in the last two years.
- Half (48 percent) of people living in private apartments in Australia are 20 – 39 years old.
- Half (50 percent) of Australia’s strata building stock was constructed before the year 2000 – a phenomenon which SCA says highlights a need for proactive maintenance (see below).
- NSW recently became the first state to surpass one million strata lots with a nine percent growth over two years.
- The ACT had the highest growth rate in the last two years with a 19 per cent increase in lots since 2020.
- New Zealand has 164,246 lots across 15,180 schemes, placing the country somewhere between SA and WA in terms of strata market size.
- The strata industry directly employs over 10,000 people and creates more than $7bn in economic activity annually. This includes almost four thousand strata managers and more than 6,000 other staff.
Professor Hazel Easthope, lead researcher for the project at UNSW, said the growth in strata-titled dwellings have been significant.
“Both Australia and New Zealand have seen rapid growth in strata-titled dwellings, both in the last decade, and as this research shows, in the last two years,” Easthope said.
“This increase reflects population growth as well as government policies to promote urban consolidation – that is, building up, rather than out – within existing urban areas.
“Strata-title property ownership was introduced in Australia in the 1960s. Strata developments have grown from an initial concentration in a few small pockets of urban areas, to become an important feature of the housing landscape across Australia and New Zealand,” she said.
Chris Duggan, National President of Strata Community Association, said the momentum of strata titled living should not be underestimated.
“The strata-living juggernaut continues to gather pace across Australia and New Zealand,” he said.
Asked by Sourceable about any myths or misconceptions which exist in relation to strata, Duggan says that strata living can sometimes be seen as a lesser version of stand-alone detached housing and is primarily focused around lower priced entry points for new participants in the housing market.
Whilst strata certainly does serve the lower entry points, Duggan says it is also serves as a housing form of choice for many whose living preferences revolve around community living, location and amenity.
Indeed, he says the desire to be close to transport, employment and amenity is one of the most important drivers of strata living growth.
With an insured value of $1.3 trillion meanwhile, Duggan says the size and scale of the strata sector is often not fully appreciated.
In fact, he says that strata titled properties are likely to remain the predominate form of dwelling for mum and dad property investors for the foreseeable future.
This is the case notwithstanding that build for rent is the flavour of the month from an institutional viewpoint.
Duggan says the strata industry has evolved in several ways over the past decade.
First, there has been a growing complexity in forms of residential construction and titling.
Beyond that, owner expectations around the level of professional services provided have evolved as consumers have become increasingly more educated and more demanding.
Both of these factors have fed into the biggest transformation which has been the professionalisation of the sector, which has occurred as the sector has grown to now directly employ more than 10,000 workers.
Speaking particularly of the situation in NSW, Duggan says a watershed moment has been the implementation of a Professional Standards Scheme, which was developed by Strata Community Australia (NSW) and has been recognised in NSW by the government in that state.
This has not only communicated expectations within the strata management industry but has elevated the standing of the sector with both government and consumers as an industry of professionals that is supporting the quality of the strata living experience.
Asked about the impact of COVID on consumer living preferences, Duggan says the pandemic has served to accelerate a trend toward smaller households within strata units that was already evident on account of shifting demographics.
Whilst he acknowledges that the volume of new strata units being delivered has been more subdued over the past two years on account of the pandemic, Duggan says the factors underpinning demand for strata living remain strong and that this will be reflected in new project volumes over time.
(For numerous reasons, the pandemic – and now rising interest rates – have impacted construction and delivery of multi-unit dwellings over the past few years even as construction of detached homes has surged.)
Going forward, Duggan says SCA would like to see further action on planning and building reform to help facilitate the quality and availability of strata living.
Whilst he applauds efforts to improve the quality and safety of new builds especially in New South Wales, Duggan would also like further action to improve the quality of the older building stock.
With around half of all strata developments that are currently in place having been constructed before 2000, he says there is a need to focus on preventative maintenance.
“I think there is a sufficient focus at the moment on new build delivery,” he said.
“The challenge that we have and that this report identifies is the large number of schemes that were built before 2000. More than 50 percent of all strata schemes across Australia are now 23 years old or more.
“For us, that is the broader concern. There is a light touch regulatory oversight of those older schemes relative to new buildings. But that’s where I think there is a capex cliff coming where these buildings need to invest in and allocate significant capital to ensure that they undertake appropriate preventative maintenance to make them not only safe and habitable but so that they can thrive and support the communities who reside in them.
“We would like to see regulation focused on older buildings so that they can serve their focus which is supporting a large proportion of the market that resides in strata in older buildings.”
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