The Australian property development industry has weathered significant challenges over the past few years, from the disruptions of COVID-19 to soft market conditions and the relentless rise in construction costs. However, as we move into the 2025/2026 financial year, there is growing optimism in the sector, driven by an evolving lending landscape and increasing access to construction funding through reputable fund managers.
Major Banks and Their Lending Outlook
Top-tier banks—including Commonwealth Bank, Westpac, NAB, and ANZ—continue to play a crucial role in commercial lending. However, their approach has shifted in response to risk mitigation strategies. While traditional lending criteria remain stringent, banks are showing a renewed willingness to finance well-structured projects, particularly in high-demand urban growth corridors across Sydney, Melbourne, and Brisbane.
Key trends shaping bank lending policies include
- Preference for Established Developers – Banks are prioritizing lending to experienced developers with a proven track record, strong pre-sales, and detailed feasibility studies.
- Selective Financing – Residential developments with strong owner-occupier demand, commercial projects with long-term lease agreements, and industrial precincts aligned with logistics and e-commerce growth remain favourable for funding.
- Increased Scrutiny on Construction Costs – Given past cost overruns, banks require fixed-price contracts and experienced builders to minimize risk.
- While banks remain cautious, alternative funding solutions are bridging the gap for developers who may not meet traditional lending requirements.
The Rise of Private Lending and Reputable Fund Managers.
The tightening of bank lending criteria has opened the door for non-bank lenders and reputable fund managers to step in with flexible funding options. Private capital has become a key enabler of development finance, particularly in capital cities along the eastern seaboard.
Notable advantages of private lending include
- More Flexible Lending Terms – Unlike banks, private fund managers tailor solutions to project needs rather than rigid lending formulas.
- Faster Approval Times – With streamlined processes, private lenders can fund projects in a fraction of the time it takes banks to assess and approve loans.
- Higher Loan-to-Value Ratios (LVRs) – While banks typically finance up to 65% LVR, private lenders may offer over 70% and up to 80%, reducing developers’ upfront equity requirements.
BEDROCK Funding is actively supporting residential, commercial, and industrial developments in high-growth regions.
A Positive Outlook for the Industry
Despite past challenges, FY 2025/2026 presents a more stable and opportunity-rich environment for property developers. The combination of cautious but renewed bank lending and a robust private funding sector means that well-planned projects continue to receive financial backing. With strategic financial planning and alignment with reputable funding sources, developers can capitalize on the ongoing demand for housing, commercial hubs, and industrial assets in Australia’s thriving capital cities.
For developers looking to secure funding, the key takeaway is clear – while banks may not be as aggressive as in past cycles, reputable fund managers and private lenders are ensuring that strong projects receive the support they need to move forward. The outlook is promising, and those who adapt to this shifting financial landscape will be best positioned for success.