As ASIC ramps up scrutiny of the private funding space, the Property Council has issued a strong warning: don’t lump entrepreneurial property deals in with retail lending risk.

The regulator has expressed growing concern that private markets—particularly private lending—are flying under the radar, and that this lack of oversight could pose risks to the broader financial system. But the real issue here isn’t fraud, predatory lending, or even consumer harm. It’s control.

During the GFC, Australia weathered the storm better than most due to tight lending regulations, conservative credit assessment, and a banking system overseen by APRA. Responsible lending standards, particularly through regulated institutions, allowed the government to throttle credit when it needed to cool the property market.

Now, with private money increasingly funding property transactions, ASIC and Treasury are nervous—not because something has gone wrong, but because they can’t control it.

Private Lending ≠ Systemic Risk

Let’s be clear: this isn’t about dodgy lending or desperate borrowers.

Private lenders operating in the commercial and entrepreneurial property space—like the ones our community utilises —don’t lend to first-home buyers at 95% LVR. They’re not fuelling unsustainable credit bubbles. Quite the opposite:

• LVRs are typically 65–75%, often more conservative than banks.
• Lending is based on deal logic, not just borrower income.
• Pricing reflects risk, which acts as a natural deterrent to overleveraging.

Private funding plays a critical role in enabling projects that are viable but fall outside rigid bank criteria—particularly for flippers, subdividers, and developers running property as a business.

What’s Really at Stake

What ASIC wants is control over monetary levers. By controlling the banks, they can tighten credit and dampen buyer activity, which cools the market. But private funding bypasses that mechanism—and that’s what’s keeping them up at night.

The Property Council is right to call this out. Their message: don’t use consumer-level rules to regulate commercial actors. We don’t need protection from ourselves. Entrepreneurs and sophisticated investors are not driving systemic risk—they’re managing it, one deal at a time whilst helping solve a housing crisis.

What to Watch

If you rely on private funding:

• Expect pressure for increased disclosure or reporting obligations.
• Keep your paperwork tight—transparency and compliance will matter more.
• Stay abreast of changes and requirements when applying for loans.

This isn’t just regulatory creep—it’s about who controls credit, and by extension, the market.

Big Banks Signal Rate Cuts Amid Surging Property Confidence

Australia’s major banks are forecasting significant interest rate cuts, aligning with a notable increase in property market confidence. The NAB Residential Property Index surged to +40 in March 2025, indicating growing optimism in the housing sector. NAB anticipates the Reserve Bank of Australia (RBA) will reduce the cash rate to 3.1% by August 2025 and further to 2.6% by early 2026.

Key Highlights:

• Interest Rate Forecasts: NAB expects a total of 100 basis points in interest rate cuts by August 2025, starting with a significant 50 basis point cut on May 20.
• Economic Outlook: Lower interest rates are projected to support economic growth, with inflation stabilising within the RBA’s target range and unemployment remaining below 4.5%.
• Property Market Impact: House price growth expectations have nearly doubled to 2.3%, and rent growth is projected at 2.2% for the coming year.
• Lending Activity: Improved market conditions and anticipated rate cuts are leading to increased lending activity, particularly in capital cities where housing supply remains tight.

Implications for Property Entrepreneurs:

The anticipated rate cuts and rising property confidence present opportunities for property entrepreneurs. Lower borrowing costs can enhance project feasibility and profitability. However, it’s crucial to remain vigilant about potential regulatory changes and market dynamics.

Melbourne Leads Property Price Surge Post-RBA Rate Cut

Following the Reserve Bank of Australia’s (RBA) recent interest rate reduction, Australia’s property market is experiencing renewed momentum, with inner Melbourne emerging as a standout performer.

Key Highlights:

• Inner Melbourne’s Growth: Since the RBA’s February rate cut, inner Melbourne house prices have increased by 3.6%, while unit prices have surged by 5.9%. This marks a significant turnaround, especially for units, which are now showing positive annual growth.
• Buyer Confidence: REA Group’s Residential Audience Pulse survey indicates that 40% of Victorian respondents believe it’s a good time to buy—the highest sentiment across all states.
• Investor Activity: Investors are re-entering Melbourne’s unit market, attracted by affordability and strong rental yields. Despite previous disincentives, the lower price points are drawing renewed interest.
• Adjacent Suburb Interest: As prices rise in central areas like Fitzroy and Carlton, buyers are expanding their search to neighbouring suburbs such as Flemington and Kensington, indicating a ripple effect in buyer activity.
• National Trends: Other cities are also witnessing growth. Sydney’s inner west house prices have risen by 2.7%, and Brisbane’s inner-city unit prices have increased by 2.5%, showcasing a broader national uplift in property values.

Implications for Property Entrepreneurs:

The current market dynamics present opportunities for property entrepreneurs, especially in Melbourne’s unit sector. The combination of rising buyer confidence, investor re-engagement, and expanding interest in adjacent suburbs suggests a favourable environment for strategic investments.

Global Investors Eye Australia Amid US Uncertainty

Australia’s property market is attracting increased attention from global investors, positioning the country as a “safe haven” amid geopolitical and economic uncertainties, particularly surrounding the second term of US President Donald Trump.

Key Insights:

• Stability and Growth Potential: Australia’s real estate sector is perceived as a stable investment with upside potential, especially in Sydney and Melbourne.
• Resilience During Past Volatility: During Trump’s first presidency, Australia’s property market demonstrated resilience, with strong demand and stable occupancy rates up to the onset of the pandemic.
• Shift in Global Capital Flows: Data from Cushman & Wakefield indicates that Asia Pacific’s share of global real estate investment rose from around 15% to nearly 25% during Trump’s first term, with capital flows into the Australian real estate market growing from 39 bil to 70 bil.
• Defensive Asset Appeal: With real estate often viewed as a defensive asset, institutional investors are increasingly favouring Australia’s property market amid global economic volatility.

Implications for Property Entrepreneurs:

The current global investment climate presents opportunities for property entrepreneurs in Australia. The influx of international capital can lead to increased demand and potential partnerships, especially in development real estate projects. Entrepreneurs should consider:

• Engaging with International Investors: Building relationships with global investors seeking stable markets can open avenues for funding and collaboration.
• Highlighting Australia’s Stability: Emphasising the country’s economic resilience and growth potential can attract investors looking for yield and a safe haven.
• Monitoring Global Trends: Staying informed about international economic shifts can help in anticipating investor behaviour and adjusting strategies accordingly.

Regards,

The Property Lovers Team