New LDC supply momentum fades again
The Sector > Provider > General News > New LDC supply momentum fades again as second half 2023 boost stalls

New LDC supply momentum fades again as second half 2023 boost stalls

by Jason Roberts

May 28, 2024

The increase in growth in long day care (LDC) services opening across Australia, which began in the three months to June 2023, has stalled out, bringing to an end the first ‘mini boom’ in new supply since the end of the COVID-19 pandemic. 


According to the latest ACECQA NQF Snapshot the number of new LDC services that opened in the first quarter of 2024 increased by 3.5 per cent, higher than the prior year but down from the 3.61 per cent year on year growth rate recorded last quarter, and 3.65 per cent the quarter before. 



The inability of growth rates to regain any form of pre COVID-19 momentum is linked to continued challenges in the development space as highlighted by Nido Early School in a recent trading update. 


“Increased construction costs, shortage of trades, and construction company failures have resulted in renegotiation of rents across many locations. As a result we have experienced delays in construction commencement pushing thirteen builds into 2025,” the Group stated. 


However, although new openings are not accelerating they are also not collapsing either, with 73 new centres opening in the March quarter, a level consistent with the lower section of the range recorded in the last seven years. 



From a state and territory perspective the more muted performance from the larger states, New South Wales and Victoria, has helped the national data mask some still quite substantial growth rates in the smaller states. 


Western Australia is a case in point with the 5.4 per cent increase being the fastest growth rate recorded in three years, alongside the Northern Territory, with South Australia’s growth rates remaining elevated although not at record levels. 



Overall, approved providers will be encouraged with national data signaling no acceleration in new supply is likely to be forthcoming, however, there are certainly pockets of activity regionally which are worthy of concern and also likely locally, given the capacity for developers to gravitate to specific areas where catchment dynamics are particularly strong. 


To review the latest snapshot please click here

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