SDA Pricing Review

Following a significant period of industry consultation, the National Disability Insurance Agency (NDIA) delivered the first Specialist Disability Accommodation (SDA) Pricing Review on 16 June 2023.

With the input of a wide variety of industry stakeholders, the Review forms a comprehensive re-evaluation of pricing variables, mechanisms and numerous other recommendations formulated to guide market investment and provide optimal outcomes for participants.

We’ve provided below a snapshot of key recommendations.

• New Build Base Prices Changes/Highlights by Build Type: House, with the largest increase in mean funding of 83.8% and Apartment with the lowest increase in mean funding of 16.7%. Overall, on average Base Price funding has increased by 40.1% on average.
• New Build Base Prices Changes/Highlights by Design Type: Improved Liveability, with the largest mean increase of 105.3% and High Physical Support with the lowest mean increase of 9.9%.
• Location Factor Changes/Highlights by States: Overall, there is a significant increase in regional SA4s in each State and an increase in metropolitan SA4s, particularly in Melbourne and Brisbane. The mean increase in location factor is 0.81%.
• Fire Sprinkler Allowance to be applied on a lump sum basis equating to an adjustment of between 1.8% – 8.7% across build types.
• Proposed vacancy rate assumptions have been increased to better encapsulate initial vacancy and letting up periods.
• Change in timing of ‘New Build’ funding from upon issuance of occupancy permit to first date a provider is eligible to claim an SDA amount in respect of an SDA eligible participant.
• Bifurcation of SDA Base Prices based on whether GST Input Credits have been claimed.
• Indexation of Annual Benchmark SDA Amounts and Participant Plans to occur in line with the Consumer Price Index (CPI).
• The NDIS is to provide more accurate, and census driven market stewardship with a more active approach to supply/demand tracking.

 Market Impact

• As a direct function of a significant uplift in funding, we expect to see increased development appetite for Improved Liveability accommodation.
• The combination of decrease in apartment base price funding and increase in regional location factors is expected to shift supply/demand outcomes.
• We anticipate a reconsidered approach to participant mix projections and adjustments to existing let up strategies.
• Stakeholders will have more certainty, which will likely increase transaction volumes and development activity – particularly in metropolitan regions across Australia.
• Variance of changes in funding levels will have an impact on occupancy and investor return profiles.
• Adjusted Base Price Funding in accordance with tax (GST) status and fire sprinkler allowance is likely to impact market pricing, with separate economies expected.
• We expect to see an increase in quality product accommodation outcomes.
• There will likely be stronger incentivisation for tenant providers/operators to achieve better placement outcomes for participants.

For more information, please contact the M3 Valuations team at info@m3property.com.au.

Click the link below to download in PDF format.

SDA Pricing Review – June 2023