10 STRATA PREDICTIONS FOR 2024
January 25, 2024
or, what can strata citizens expect this year …
A Quick Read
I don’t have a crystal ball. But, as a strata thinker and commentator, I think I can make some predictions about the trends that will impact Australian strata title experiences over 2024. So, here are my 10 predictions, which I’ll revisit at the end of the year.
As another year begins in strata land, many Australian strata citizens are wondering what it will be like. Will it be the same, better, or worse than 2023 and in what ways?
So, even though I don’t have a crystal ball, here are my 10 predictions for Australian strata title in 2024.
Sadly, they’re mostly [but not exclusively] trends that will make things harder and not necessarily better.
1. Less and less strata committee executives
Despite one or two decades of imposing stricter and stricter demands and control on strata committee executives, taking away their power and autonomy and the increased pressure on them inside strata buildings with little gratitude. Plus, there are law changes to make it easier to remove strata committee executives and calls for them to have training or qualifications.
So, we’re going to see fewer and fewer strata owners wanting to take on strata committee roles and smaller or non-existent strata executive committees.
2. More Women in Senior Roles in Strata Management:
There’s been a medium-term shift towards inclusivity in the strata management industry with more women strata managers with more and more women being employed in those roles. That’s been coupled with an aging out of older male strata managers who have historically occupied senior roles in the strata management industry.
So, in 2024 those trends will converge to begin the promotion of women strata managers into senior and executive roles in medium to large strata management businesses and to start leading those organisations.
So, it will be interesting to see what different approaches the gender change will bring and whether the senior women strata managers stay in those roles or choose to work in their own strata management businesses [as they have largely done so far] or just leave the sector [as has occurred in other sectors like law, accounting and management consulting].
3. A NSW strata law reforms avalanche
Stages 2, 3 and 4 of the NSW will arrive quickly and without a lot of warning as the Government tries to clean things up a few years before the next state election.
Since there are another 100 plus changes with inevitable terminology changes, extra procedures, and the inevitable section renumbering, every NSW strata stakeholder is going to have to re-learn what to do, go to multiple training courses, listen to endless seminars and change internal systems and software.
So, the working non-strata owner part of the strata title sector will be swamped under an avalanche of change management. Leaving them overworked, unsure about changes and less able to provide services to strata stakeholders.
4. Building defects continue [and worsen]
Strata building defects issues will continue and probably get worse as the slackness of construction controls over the last 5 years [including during Covid] whilst the property boom was in full swing will manifest itself into lots and lots of latent strata defects starting popping out of the strata building woodwork.
That’s regardless of improvements occurring around Australia like building bonds, cladding replacement programs, class actions, new NSW civil rights laws, building Commissioners, decennial insurance ideas, building defect litigation, etc, etc, etc since those things are only handy for new buildings.
So, this is just more [and more] of the same.
5. The strata insurance crisis worsens
There are plenty of signs that the strata insurance crisis [ever increasing premiums, reduction or limitations in cover, conditions being imposed on continued insurance protection, higher excesses, refusal to insure some buildings, and high commissions] will continue.
Plus, climate change impacts on extreme weather events are likely to exacerbate those things.
That means that every strata building with an existing insurance dilemma will still have to deal it in 2024 and more strata buildings will face those dilemmas and challenges for the first time.
6. More pets in more strata buildings, in more states
Now that NSW has become the strata pet state, other states will follow to make keeping a strata pet easier, ruling that pet bans and limitations are prohibited and making pet approval the default position.
Plus, tenancy laws will start to change to match strata laws on keeping pets by strata renters.
So, get ready for more strata animals in more strata buildings.
7. The 2 speed strata management sector
The strata management sector will continue to bifurcate away from the medium sized strata management business.
That will happen as:
- larger strata manager businesses keep acquiring small to medium sized businesses to grow scale and [maybe] margin, and
- small new strata management start-up businesses emerge as strata managers leave their employment or enter the sector and start micro businesses relying on their reputations, connections and some kind of personal service based value add offering,
- squeezing out the middle who cannot easily compete with the resources and scale of the large organisations and the service offering of the start-ups.
This will lead to the polarisation of the strata management sector with few incentives for the largest business to innovate [instead of growing revenues by acquisition rather than marketing and margin increases] and new micro businesses that can’t afford to innovate or sustain innovations as they inevitably grow into small businesses due to their [at least initially] higher service levels.
8. More and bigger strata levies arrears
Increased mortgage interest rates won’t come down much in 2024 [even if they don’t keep going up] and inflation may or may not come down. So, the financial pressure on strata owners that started in 2023 will continue causing reduced capacity to pay bills including strata levies.
This has happened before, and when it did, many strata owner elected to pay strata levies last given the less immediate impact on their lifestyle of having strata levy arrears compared to other overdue bills.
So, strata buildings will see more strata owners’ levies getting into arrears, for longer and for increased amounts.
9. A strata building cash flow squeeze
A few financial trends will cause a strata building cash flow squeeze across the strata title sector generally in 2024 including:
- The increases in strata levy arrears.
- Inflation impacts on strata building running costs.
- Increasing strata insurance premiums.
- More building repair and maintenance work pressures from insurers, Tribunals and regulators.
- Higher workload [and costs].
So, increased strata operating costs need to be paid just as fewer strata owners can afford to pay strata levies.
You know what happens next.
10. Strata communications under focus
Strata communications inside and to/from strata buildings will come under focus and competing pressures.
That’s because there are conflicting demands from strata citizens of all kinds about those communications including:
- Strata owners and executives not wanting their contact details shared
- Strata managers not wanting to hear from every strata owner on every issue all the time.
- Strata owners not knowing who to contact and how.
- Frustration spilling into rude, bullying and unpleasant communication.
- Risk of defamation allegations or claims.
- Strata owners, renters, buyers and others wanting more and more strata information, generally and specifically about strata buildings.
It is also because the volume of strata communications keeps increasing and is overwhelming stakeholders with emails, phone calls, IMs, DMs, SMSs, chat groups, and more: perversely leading to less frequent and timely communication.
So, I can’t predict what will happen with strata communications in 2024.
But it is very clear that there will be increasing focus on and scrutiny of these communications and, probably, a few unusual solutions being proposed.
2024 is mostly likely to be a year of some disappointments as medium and long-term trends converge with economic pressure, weather challenges, ageing buildings and law reforms to cause more challenges for strata citizens everywhere.
But, it’s not all bad news as women are ascendant, long awaited changes arrive and opportunities for innovations appear.
So, let’s check in again in December to see if I was right or wrong.
The article was contributed by Francesco Andreone, GoStrata