A lack of understanding around the potential benefits of developing specialist housing for disabled people has meant that supply levels remain subdued, demand remains high and billions of dollars in available government funding remains untouched.
According to the Health Care Providers Association, specialist disability accommodation, which has grown to a $2.5-billion asset class in just five years, is now poised to expand further with National Disability Insurance Scheme services forecast to triple by 2023.
Demand in satellite suburbs is now reaching unprecedented levels, with funding available to areas with strong potential for development, such as Victoria’s Craigieburn, set to reach more than $4 million by June, 2023.
Health Care Providers Association founder Kyle Hunt said the majority of investors and developers were unaware that such funding even existed.
“There is still little knowledge out there of these benefits and we are seeing billions of dollars in potential funding remaining untouched,” Kyle said.
“As a result, millions of people across Australia who are living with a disability are unable to receive the support and accommodation they need, and deserve.”
Changes in available funding for NDIS services
^Source: The Australian Government Department of Social Services
Kyle said investors and developers building within the residential sector could double or even triple their return on investment by building a specialist disability accommodation home, as opposed to a standard home.
“The average return on investment on a standard home is 6 per cent or $30,000 per year,” Kyle said.
“By building a specialist disability accommodation approved home, investors can claim board, pension, furniture and more through government funding, driving their return on investment up to $120,000 per year for just one occupant.”
According to the not-for-profit Summer Foundation, there are currently more than 33,000 Australians requiring supported specialist accommodation but only 4000 such dwellings available across the country.
Currently 9 per cent of users in specialist disability accommodation are based in large institutions, 5 per cent in small residential institutions and 86 per cent in group homes.
The lack of supply means that almost 27,000 people with very high support needs are not currently living in specialist disability accommodation or aged care.
According to the National Disability Insurance Agency, that figure will likely grow by 35 per cent over the next four years.
The available funding is a subsidy system that effectively encourages development of high-density housing for recipients with high physical support needs and effectively discourages development of more land-intensive houses.
The federal government in August agreed to publish quarterly reports giving information about market demand.
In NSW, Sydney’s inner ring has the greatest shortfalls of specialist disability accommodation provision while metropolitan areas of Victoria, particularly Wyndham and Casey South in Melbourne, have the highest shortfalls compared to the national per capita average.
In Brisbane, the highest areas with shortfalls include the Hills District, Ormeau-Oxenford and the inner city.
A survey of funds by the Summer Foundation found the estimated returns from specialist disability accommodation investors continues to vary.
This is due to whether the funds were open to retail investors or only to institutional and sophisticated investors, the value of investment and length of investment, and the after-fee, pre-tax returns varied between 7 and 14 per cent.