SDA Property under the NDIS market report update March 2020

Demand versus supply for SDA Property

Specialist Disability Accommodation Supply in Australia March 2020

The report presents an analysis of dwelling supply currently in development and areas of potential under or oversupply of Specialist Disability Accommodation (SDA) housing across Australia. This report presents the findings of a new survey of SDA providers and developers undertaken across Australia in September 2019. As with the previous Specialist Disability Accommodation Supply in Australia (published in March 2019), this survey collected data about new SDA housing projects in development in order to determine how many SDA places are being planned or are under construction. New data was contributed by over 50 SDA providers and developers around Australia. Combined with data from the first survey of SDA places in development and still to be completed, this report identifies that there are 1,766 SDA places in development around Australia

While the SDA New Build market is still in its infancy in many parts of Australia, data analysis in this report indicates increased activity across Australia, particularly in Queensland and Western Australia. When the number of dwellings reported in the SDA pipeline is combined with the enrolled New Build SDA reported by the NDIS, this indicates a total of 2,956 new SDA places enrolled or in development as at 30 September 2019. Compared with our previous survey, the pipeline of SDA development continues to be dominated by High Physical Support properties; Apartments and Group Homes continue to be the dominant Building Types in the current pipeline.

We again examine the effect of the reported SDA development on SDA undersupply, previously reported in the Specialist Disability Accommodation Market Insights report (www.summerfoundation.org.au/ resources/sda-market-insights/). Undersupply of SDA places continues to feature in major cities and in some rural areas of South Australia, Western Australia and Tasmania. The profile of SDA providers and developers has changed in this survey with a stronger representation of private developers of SDA, compared to the first survey. This report also presents the results of additional questions we put to SDA providers and developers for the first time on the current market sentiment and typical SDA management arrangements. Roughly three-quarters of survey respondents were at least somewhat confident in the SDA supply market with 17% “very confident”. Half the survey respondents planned to build further SDA dwellings beyond their current commitments. About half of all respondents indicated that their tenants have their housing services and support services delivered by separate organisations, with another quarter contracting housing services and support services under different contracts. This is a welcome move toward ensuring real choice and control for people with disability.

The NDIS Quarterly Report for September 2019 reported that as at 30 September 2019 13,581 participants had SDA funding (4.4% of all NDIS participants) and 3,489 dwellings have been enrolled as SDA. A total of 1,684 SDA places were reported in development around Australia as at 30 September 2019, an increase of 166 places reported in the previous survey.

What is SDA?

Specialist Disability Accommodation (SDA) is housing that has been specially designed to suit the needs of people who have ‘extreme functional impairment’ or ‘very high support needs’. SDA payments for individual participants under the NDIS enable them to pay to live in SDA housing. It is expected that around 28,000 people under the NDIS will be funded for SDA, with the NDIS eventually spending around $700 million per year on SDA payments. SDA payments are provided for purpose-built housing for NDIS participants with very high and complex support needs to enable them to lead an ordinary life. These payments are made to a provider of an SDA property when someone who has been approved for SDA funding is living in it. The SDA model of funding under the NDIS creates a user-driven market that enables people with disability to decide where they live and who they live with. The model will deliver better housing outcomes for people with very high and complex disability support needs. The SDA housing market is a new and exciting market, which is expected to create thousands of new dwellings for people with disability over the next few years. However, there is complexity in the way policy governing SDA payments operates, as set out in the SDA Pricing and Payment Framework and associated documents (ndis.gov.au/providers/housing-and-living- supports-and-services/housing). Since the last report was released, the Australian Government has made a number of important changes to policy settings for SDA.

These changes include:

  • Policy and operational changes to expedite approval of SDA funding in NDIS participants’ plans
  • A review of SDA pricing assumptions (limited cost assumptions review) with resulting increases in some SDA pricing
  • Establishment of a cross-sectoral SDA Reference Group to advise on SDA
  • An SDA Design Standard
  • An SDA Innovation Plan Further policy changes are expected when revised SDA Rules are released in early 2020, in particular enabling more flexibility about who can live in an SDA dwelling (e.g. enabling family members to live together).

What is the SDA undersupply?

At a jurisdiction level, the Market Insights report found that significant undersupply for SDA places exists in NSW, Victoria, Queensland and WA, not taking into account any potential need to replace existing SDA stock. The results from this report (summarised in Table 5) indicate that efforts continue to be underway to develop new SDA places, but there remains a long way to go to make up the SDA supply shortfall.

It was reported there were 3,489 SDA dwellings enrolled in Australia in September 2019, 549 of which were New Build. There is a very different distribution of Design Categories between the New Build SDA dwellings enrolled with the NDIS and the SDA dwellings reported in development, with the latter indicating a much higher number of High Physical Support places in the pipeline compared with current New Build enrolled dwellings.

What is the confidence in SDA supply?

In comments made on the survey about why that response was provided, those who were “very confident” mentioned reasons such as:

  • Growing interest from investors, or capital secured
  • Committed to delivering the benefits of SDA housing to people with disability
  • “Huge” demand
  • Seeing more people with SDA funding in their NDIS plans

Those who were “slightly” or “somewhat confident” mentioned:

  • NDIS policy changes (about SDA) and maturing of market
  • Scheme is new and market is undersupplied
  • Improvements in processing times by the NDIA
  • Lack of available information about potential tenants
  • Slow and “clunky” NDIS processes (for approving SDA funding to NDIS participants)
  • Access to those in existing accommodation (e.g. group homes) may be “restricted by the current provider”

Those who were less confident about the SDA market mentioned:

  • Slow and “painstaking” process for NDIS participants to seek approval of SDA funding
  • Concerns with poor communication by NDIA staff with SDA providers
  • Unsure about demand
  • Very difficult to connect with potential tenants

How are SDA Providers sourcing tenants?

Respondents mostly reported that they were using a combination of methods for sourcing SDA tenants including their own website, disability housing search platforms such as the Housing Hub and Nest and referrals from partnerships with SIL providers and support coordination providers (the most common response).

Undersupply of SDA Property in Queensland

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