What does the 2026 Federal Budget mean for healthcare and aged care property?

The 2026 Federal Budget has confirmed sweeping reforms to the National Disability Insurance Scheme (NDIS), with measures expected to reduce growth in NDIS payments by $37.8 billion over the next four years relative to the NDIS Actuary's updated projections. NDIS payments are projected to be $23.9 billion below the 2025-26 MYEFO estimates over five years. The scheme will continue to grow each year, but the pace of that growth is being substantially slowed. For Australia's healthcare and aged care property sectors, the implications are significant.

Healthcare property investment

Healthcare property, spanning medical centres, specialist suites, day hospitals, and allied health facilities, has established itself as one of the more sought-after asset classes in commercial property. Transaction volumes in this sector have been volatile, reflecting a relatively thin market with a small number of high-value assets, but investor appetite has been consistent. Activity has been concentrated in Sydney and Melbourne, with growth in South East Queensland aligned with population growth and regional New South Wales also featuring in recent years.

Yields compressed sharply through the low interest rate era as investors chased the defensive, government-backed income profile these assets offer, falling to sub 5.5 per cent for some assets. That compression has since unwound, with average yields currently sitting closer to 6.5 per cent, a level that is drawing renewed interest from private investors, syndicates, and smaller unlisted funds and trusts. Owner-occupier demand has also been a feature of recent activity, with medical practitioners and specialist groups in metropolitan markets increasingly seeking to own rather than lease their premises.

The investment case is well supported by fundamentals. Medical tenants are among the stickiest in commercial property. Fit-out costs are substantial, patient bases are place-specific, and referral networks take years to establish. Practitioners do not relocate readily, lease terms are long, and vacancy risk in quality facilities is low. With demand fundamentals strengthening and yields at current levels offering genuine value relative to the risk profile, healthcare property is increasingly well placed to attract a broader investor pool, including those who previously found yields too compressed to justify entry.

NDIS reform and healthcare demand

The government's NDIS reforms aim to restore the scheme to its original intent of supporting people with permanent and significant disability. New eligibility requirements based on functional capacity assessments will tighten access from 1 January 2028, while unscheduled reassessments, a major driver of spending growth, will be curtailed. A new framework planning model takes effect from 1 April 2027.

The needs of those who transition out of the scheme do not disappear, they shift. Participants losing scheme-funded support for allied health, therapy, and community care will increasingly draw on the broader health system, including GPs, bulk-billing clinics, community health centres, and specialist services. This transfer of demand into community-based medical facilities creates a structural uplift in utilisation that is difficult to replicate in other asset classes.

Australia's demographic profile reinforces this dynamic. Population growth and an ageing population are already driving sustained demand for medical infrastructure. The increasing national focus on preventative medicine and specialist services adds further depth to that demand. The NDIS reform accelerates these trends rather than creating them. The Budget also invests $3.5 billion to strengthen Medicare, including new Medicare Urgent Care Clinics, which will further expand accessible community-level medical infrastructure.

People who need care

The reforms will also affect Australians with genuine, ongoing support needs. For those who relied on NDIS funding for home care and daily living support, services that enable people to remain living independently, access may become harder or more costly. The government has provisioned $3 billion over five years to establish Foundational Supports outside the NDIS, to be matched by states and territories, alongside a $2 billion investment in the Thriving Kids program for children with developmental delay or autism. These are meaningful commitments, but the gap between existing NDIS support levels and the foundational support model will take time to close, and some individuals will face difficult choices in the interim.

Keeping vulnerable Australians in their homes and communities is not only a better individual outcome, it is a significantly cheaper outcome for the government. Residential aged care carries far higher per-person costs than community support. Investment in the medical and allied health infrastructure that underpins independent living is therefore both a compassionate policy objective and a fiscally rational one. The Budget reinforces this with a $1 billion commitment to make personal care services, such as showering and hygiene support, free of charge under the Support at Home program alongside clinical care.

Aged care: a sector receiving direct investment

The Budget invests $3.7 billion to increase the supply of residential aged care accommodation, accelerate the release of Support at Home packages, and enhance the quality and affordability of aged care services. In a direct signal to the investment market, the government has introduced capital subsidies to incentivise the construction of up to 5,000 aged care beds per year. Providers who build new residential aged care homes will receive $30.00 per supported resident per day for up to 25 years, while those significantly expanding existing homes will receive $15.00 per supported resident per day for up to 15 years. A further $1.1 billion has been provisioned to increase and restructure the Accommodation Supplement, subject to finalising implementation details.

Transaction volumes across seniors housing and care assets reached approximately $6.4 billion in 2025, a record level driven in part by significant cross-border capital entering the market. Nursing care assets in particular saw consistent transaction activity through 2023, 2024 and 2025, pointing to renewed confidence in that sub-sector. The capital subsidy structure announced in this Budget directly addresses one of the key barriers to new supply: the financial gap between the cost of constructing purpose-built aged care accommodation and the returns available under the existing funding model.

The regulatory reform backdrop also continues to mature. The Aged Care Act 2024, which commenced on 1 November 2025, replaced the previous legislative framework and introduced a strengthened regulatory model, a new Statement of Rights for residents, and revised Aged Care Quality Standards. The Independent Health and Aged Care Pricing Authority now provides independent annual pricing and costing advice on both residential aged care and Support at Home services. The Budget allocates $120.3 million in 2026-27 to the Aged Care Quality and Safety Commission to continue its regulatory functions under the new Act, alongside $259.9 million for aged care ICT system sustainment and $565.1 million for regulatory, governance, quality and workforce support.

For investors, the capital subsidy structure, improved pricing transparency through IHACPA, and sustained government commitment to sector reform represent a more investable environment than the sector has offered for many years. Assets that meet the new quality and compliance standards are likely to be increasingly differentiated from those that do not.

The 2026 Budget will reshape how healthcare is accessed and funded across Australia. For the Australians navigating these changes, the availability of well-located, well-resourced medical and aged care facilities will matter more than ever. For investors in quality healthcare and aged care assets, the structural demand outlook has rarely been stronger.