The SDA Housing Boom – What Does it Mean for Investors?

According to the latest report from the Summer Foundation, specialist disability accommodation (SDA) has grown from nothing to a $2.5 billion asset class in just five years.  Savvy investors have already capitalised on this boom, but there is still plenty of opportunity to get on board.

Read on to find out everything you need to know about SDA, including answers to FAQs.

What is SDA?

SDA is housing that’s specifically designed to suit National Disability Insurance Scheme (NDIS) participants who have the highest care needs. It is aimed at improving the quality of life and independence of these recipients, as well as better enabling those who care for and support them.  

Is SDA a good investment?

According to the Summer Foundation report, the SDA sector has the potential to grow to a value of $5 to $12 billion to cater for unmet demand. This includes both the building and renovation to meet SDA design standards.

There are an estimated 28,000 NDIS participants who meet SDA eligibility guidelines. However, only 16,000 NDIS participants currently have SDA funding in their NDIS plans. This is partly due to a lack of SDA in specific areas across Australia.

In addition to the unmet demand, SDA housing has the added advantage of potentially providing above-average rental income compared to other investment properties. This is because the Federal Government guarantees the rental payments of eligible SDA recipients for 20 years. The NDIS has bipartisan support, meaning that the NDIS SDA sector has a secure long-term future.

The non-financial benefits of SDA investing

Investing in SDA may provide you with financial benefits, but it also enables you to make an investment that will directly improve the quality of life of an eligible NDIS recipient.

What about other types of property investment?

It’s no secret that the entire residential accommodation market has boomed in Australia over the past couple of years, not just the SDA market. However, the non-SDA market has generally slowed down significantly in 2022, and values have even dropped in some sectors of the market.

The strong fundamentals that are in place for the SDA may ensure that it remains an attractive investment opportunity for years to come, both in terms of capital growth and rental income.

How can you invest in SDA?

You can invest in SDA in any one of three ways:

1. Buying an existing SDA property.
2. Arranging for an NDIS-approved SDA builder to build an SDA on your land (existing or NDIS house and land package).
3. Arranging for an NDIS-approved SDA builder to renovate a property you own so that it meets SDA design requirements.

Can you borrow to invest in SDA?

Yes. It’s best to secure your finance from a lender who specialises in providing NDIS loans. They understand the financial context of this unique sector of the market, including the generally higher than average rental returns you can expect to help you with your loan repayments.

If you’re interested in finding out more about investing in NDIS property, please feel free to get in touch. We’re more than happy to answer any questions you may have.