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With growing concern about the evolution of the SDA market, it’s never been more important to analyse market supply and demand data. In the Quarter 1 2024/25 NDIS Quarterly report from November 2024, a new set of SDA data is available via the Supplement P appendix.
Within the SDA market, there is a growing conversation about what the data tells us about the evolution of the market, and there have been a lot of discussions about whether the SDA market is reaching a point where supply is meeting, or, in some cases, exceeding demand. These observations may, in very limited locations, be somewhat correct. However, this does not appear to take into account other market forces that will shape the current and future SDA market- like government policy.
This quarter, the data has again slightly modified, with the number of tables reduced from 18 to 16, with the participant data tables (ie the number of people with SDA Funding) in SA4 and SA3 regions being the areas that have changed. We will discuss this in more detail shortly. In this article, we will take a practical and deep dive into the SDA data: how to analyse it and all the forces that need to be considered when forming an opinion of the market.
How to Assess SDA Data
Using Supplement P Quarterly Report data, let’s look at Victoria – Melbourne – North East SA4 region as a case study. The data analysis approach we’re using can be applied to any SA4 region. The supply and demand dynamics are unique to each region, so what we find for this region probably will not be the same for other locations, especially in other states or territories. However, the analysis steps remain the same.
When assessing the data, and especially supply and demand, you want to look at:
SDA Supply
Number of Current SDA Places
The number of SDA places can be derived from Table P6 by multiplying the number of enrolled dwellings by the number of residents the dwellings can accommodate. For analysis purposes, we’ll assume there are 6 places in 6+ resident dwellings. Therefore, in Melbourne- North East SA4, there are a total of 835 places.
Make up of Current SDA Places
Also in Table P6, it is useful to calculate the number of places in a dwelling with 4+ places. In the North East Melbourne example, there are 510 places in dwellings with 4+ places, which is 61% of dwellings.
The number of new builds vs existing stock places is slightly more complex to derive. It can be gleaned from Table P10, which lists the number of dwellings by design category and build type. Table P10 indicates that there are 234 new build places, or 28% of all current dwellings. Note that you could also derive the same information from Table P11, which lists existing and legacy stock.
Unfinished SDA Places
The last piece of data is the number of unfinished SDA places. This is presented in Table P15. These are, in theory, SDA dwellings that have been committed to be built. But it’s difficult to predict how many will actually be built and enrolled. For the example of Victoria – Melbourne – North East, table P15 suggests there are 352 unfinished places if all are built.
SDA Demand
Number of People with SDA Needs
Table P9 provides data on the total number of people with SDA funding, and divides it into people using their funding and people not using their funding. For the North East Melbourne example, the numbers are as follows:
Number of people with SDA in use - 564
People not utilising SDA funding - 189
Total - 753
DSC’s SDA Forecast Tool
DSC has its own internal model to calculate the total number of people likely to be SDA eligible across all regions of Australia. Our tool suggests for this region that the total number of people likely to be SDA eligible is 904.
NDIS SDA Demand Projections
In June 2023, the NDIS released a report titled “SDA Pricing Review 2022/23 Demand Projections”. In Exhibit 7 of this report, the NDIS projects the total number of people likely to be SDA eligible across SA4 regions. In North East Melbourne, the projections are:
What Does it All Mean?
How on earth do we make sense of all of these numbers? It's actually incredibly difficult without a detailed understanding of the broader market forces. So before we start to draw conclusions, let’s examine what else is happening.
The Other (Important) Market Forces
The (Disability) Housing Market
Understatement of the decade – there is a lot happening in the NDIS at present. And the home and living area is not immune. The NDIS Review, the Royal Commission and the NDIS Commission Own Motion Inquiry have all challenged whether larger dwellings (4 or more people) will be appropriate in the future. These reports and reviews all suggest that larger settings should be phased out. If/when this happens, all of the old build SDA places (61% in our case study) would need to be replaced with new build SDA.
Broader NDIS Home and Living Funding
The funding a person receives for support in the home is considered separately from their SDA funding and does not take into account the person’s living environment. It’s usually calculated on a 1:3 ratio. This change to individualised funding has resulted in many people seeing a reduction in their support funding. Much to the dismay of many providers.
The (Support) Provider Market
As the NDIS shifts to individualised funding approaches, providers need to be innovative, especially in shared settings, while sticking to the funding limitations of each individual. At the same time, the NDIS is prioritising dignity of risk and supported decision making, which further drive the need for providers to individualised services. At this point, the ability or willingness of some providers to adapt to this relatively new approach can prevent a person from accessing SDA, if the support provider doesn't believe they can make the person's support funding viable.
SDA Prices and Flexibility
Since the SDA Price Review in 2023, there has been a convergence in SDA prices. This means that the difference in prices between different types of SDA in the same design category are now minimal. For example, in the Fully Accessible design category, the base SDA price for a 2 resident apartment is almost identical to that of a 2 resident villa. But it is lower than the price of a 3 resident or a 4 person group home. This gives people flexibility to choose to live in a different type of SDA than what was specified in their eligibility outcome. Though obviously their support funding will also need to be considered.
Drawing Conclusions
Now that we have the complete picture of what needs to be considered in an SDA supply and demand analysis, let's circle back to Victoria - Melbourne - North East.
Firstly, it is likely the number of people accessing SDA will grow. There are 753 people with SDA funding at present, but both DSC and NDIS forecasts suggest there will be between 904 (DSC forecast) and 1107 (NDIS SDA Projection for 2042) in the future. Of the 753 people, there are 189 people not using their SDA funding. This indicates that people either don’t want to live in the type of SDA that is available/vacant or they cannot find a provider to make their support funding viable in the type of SDA available. Both are likely scenarios.
Secondly, there are a total of 835 SDA places. So, in fact, there is more than the number of people with funding. This further reinforces that the 189 people who are not using their SDA, are doing so because of personal preferences and/or provider inability to make their funding viable. It is likely that there is relatively high vacancy rates in this location, and given there are 510 places in 4+ people settings, a lot of vacancies are probably in these dwellings.
Looking to the future, the 510 places in larger settings will likely be phased out. Right now, there are 352 places unfinished. Even if all these are actually built, without the larger resident dwellings, the shortfall of SDA places will grow. Obviously, things will not remain static in terms of proposed SDA builds, and a million things may happen in the future, but it is useful to run these numbers to get a feel for the supply and demand dynamics within the location.
The conclusion is that there is an undersupply of newly built SDA in this region.
Disclaimer: DSC articles and information are not a substitute for legal, financial, or other professional advice. Any advice and/or opinion provided must not be relied upon to achieve any particular outcome.'
