Commercial real estate lenders are maintaining a positive outlook despite ongoing global uncertainty, with most planning to increase their loan portfolios in the coming months. According to the CBRE Lender Sentiment Survey, 56 percent of lenders expressed intentions to grow their commercial real estate exposures, while none of the surveyed lenders planned to decrease their lending activities.

The survey, which gathered responses from 34 commercial real estate lenders, revealed steady demand for commercial mortgages over the past year. The industrial and logistics sector continues to dominate investment preferences among lenders, followed closely by residential property. Build-to-rent properties ranked third in popularity, showing a slight increase in interest compared to the second half of 2024.

Student accommodation has emerged as a significant area of interest, with nearly a quarter of lenders ranking it among their top two preferences. Meanwhile, lenders maintain a cautious approach toward office real estate, reflecting ongoing concerns about the sector’s performance.

Data centres, which were highly favoured in the second half of 2024, have seen a decline in preference, dropping from third to fifth place among lenders’ priorities. This shift indicates changing dynamics in the commercial property landscape. CBRE Research found that asset type and location were among the top three factors influencing lender appetite for refinancing.

Regarding interest rates, more than half of the surveyed lenders anticipate two additional rate cuts during the remainder of 2025. However, there was no consensus among lenders about where the cash rate might stand by June 2026. Andrew McCasker, CBRE’s managing director of debt and structured finance, pointed to strong fundamentals supporting the lending market.

“The domestic banks sit on strong balance sheets and there has been a significant amount of capital raised in the private credit sector,” Mr McCasker said. “This is underpinning competitive tension and strong appetite for lending to quality assets and sponsors.” The office sector continues to face particular scrutiny from lenders. Will Edwards, CBRE debt and structure finance director, said that a selective approach is being taken. “Amid caution in the office sector, we are seeing lenders take a considered approach to the sector reflective of flight to quality in the asset class,” Mr Edwards said.

Despite elevated costs of debt, the overall sentiment among commercial real estate lenders remains positive, with increased appetite for new loans anticipated over the next three months.

COMMERCIAL PROPERTY MARKET POISED FOR GROWTH IN 2026

Australia’s commercial property market is showing signs of recovery after a challenging period, with tentative growth expected throughout 2025 and stronger performance anticipated in 2026.

According to Knight Frank Chief Economist Ben Burston, the worst of the economic news is behind us, with the nascent recovery in commercial property markets largely due to gradual improvement in the macroeconomic outlook since mid-2024. “It started with the commencement of the rate-cutting cycle overseas, which buoyed sentiment,” Mr Burston said.

“Australia has been late to the party, with inflationary pressure more persistent than in other major economies during 2024, but sequential quarterly data releases in January and April have been reassuring and the RBA has now cut rates twice.”

The return to sizeable returns across commercial property sectors will not be uniform, with industrial and logistics properties leading the recovery while office markets are expected to lag behind.

JLL’s latest report reveals the industrial property market is returning to growth as yields begin to compress for the first time since early 2024. National industrial capital value growth is projected to rebound to 8.7 per cent year-on-year over 2025, marking the strongest annual growth since Q3 2022. Annabel McFarlane, Head of Strategic Research at JLL Australia, said there was a significant shift in the market dynamics.

“With global volatility impacting trade and consumer confidence, industrial real estate is increasingly being viewed as a low-risk hedge against equity market and currency fluctuations, which is broadening the investor pool and supporting asset pricing,” Ms McFarlane said.

The report highlighted geographic variations in the industrial sector, with Melbourne accounting for 64.3 per cent of quarterly supply while Sydney recorded just 43,238 sqm, its lowest quarterly completion figure since 2015.

Retail property markets are showing mixed signals despite April’s unexpectedly downbeat results. CBD retail locations have demonstrated strong recovery, with vacancy rates dropping from 11.6 to 10.0 per cent. JLL’s Lee McLaughlin said there were regional variations in retail performance, with Sydney emerging as the standout performer.

“Sydney has emerged as the standout performer, boasting the lowest vacancy rate of 3.9 per cent across all asset sub-sectors,” Mr McLaughlin said. “This represents a significant 1.3 percentage point decrease year-on-year.”

Despite positive signs in various sectors, economic headwinds remain. Australia’s first-quarter economic growth missed estimates, with real GDP expansion at just 1.3 per cent. Natural disasters in 2025 have cost the economy $2.2 billion, while uncertainty from US tariff policies is expected to impact investment and employment.

Mr. Burston remains optimistic about the medium-term outlook. “Commercial property markets will respond to the rate-cutting cycle, and the shift in the outlook raises the prospect of yield compression in the second half of the year, starting in the most favoured core markets,” he said.

NSW GOVERNMENT SET TO RESHAPE THE COMMERCIAL PROPERTY LANDSCAPE

The NSW Government has earmarked $30.8 billion for infrastructure investment aimed at creating new business hubs beyond traditional CBDs. According to Ray White Group Head of Research Vanessa Rader, the substantial infrastructure commitment outlined in the recent budget will establish new commercial nodes throughout Western Sydney, changing how and where commercial development occurs.

“The government is actively repositioning commercial value away from traditional business centres,” Ms Rader said. “Transport investment, health and education infrastructure, and innovation precincts will redefine where and how commercial property is developed.”

The investment includes a $5.5 billion roads package and $123.6 million for Aerotropolis development, which will redirect commercial demand toward transport-oriented and mixed-use precincts across the region.

Innovation and technology sectors receive significant attention with $79.2 million allocated for an Innovation Blueprint and $38.5 million for the Tech Central Hub, designed to attract knowledge-based industries requiring flexible, technology-enabled spaces.

A newly established Investment Delivery Authority will expedite non-residential projects valued over $1 billion, potentially unlocking up to $50 billion in commercial investment annually. Perhaps the most innovative measure is the $1 billion Pre-Sale Finance Guarantee, the first of its kind in Australia.

The scheme will see the state guarantee pre-sales on up to 5,000 apartments, helping developers secure financing to build an estimated 15,000 homes over a five-year period. Treasurer Daniel Mookhey described the guarantee as “a canny use of our state’s balance sheet” designed to overcome feasibility challenges that have stalled construction projects throughout NSW.

“Industry can spend less time and resources having to convince their banks that there are buyers of these apartments and more time building them,” Mr Mookhey said. Ms Rader said it was increasingly important to have creative and mixed-use commercial formats, supported by $586.2 million in creative economy funding. The pre-sale guarantee also has potential to activate integrated developments that combine residential and commercial spaces.

The budget further commits $12.4 billion to health infrastructure and $10.4 billion to education facilities, which are expected to generate stable commercial demand near new precincts in Bankstown, Westmead, Rouse Hill and Wollongong. These growth initiatives come alongside a $9.4 billion reduction in state debt, enhancing fiscal confidence for long-term investors. Treasury now projects a return to budget surplus by 2027-28, though the treasurer cautioned that “a lot needs to go right for us.”

FIVE ADVANTAGES OF A LOW-DOC BUSINESS LOAN

For many small business owners and self-employed Australians, accessing traditional business finance can be frustrating, especially if your paperwork isn’t up to date. Whether you’re newly self-employed, operating a seasonal business, or simply haven’t lodged your latest tax return, you may not meet the criteria set by major lenders. That’s where low-doc business loans come in.

Designed to provide funding without the usual paperwork, low-doc loans are assessed using alternative forms of documentation, like bank statements, BAS, or an accountant’s letter.

They can be a lifeline for entrepreneurs who need quick access to capital without the red tape. Here are five advantages of low-doc business loans that make them a valuable option for many business owners.

Easier access to funds when financials aren’t available

Low-doc loans are a practical solution when tax returns or full financial statements aren’t available. Instead, lenders can assess your application using other documents like recent bank statements or BAS. This flexibility opens up funding opportunities for business owners who would otherwise be knocked back by mainstream lenders.

Faster approval turnaround

With fewer hoops to jump through, the approval process is often faster than standard loans. If timing is critical, say you need to purchase equipment, pay a supplier, or grab a short-term opportunity, a low-doc loan can help you act quickly and keep your business moving.

Flexible lending criteria

Low-doc loans are built for borrowers with non-traditional income structures. Lenders assess your financial position based on current cash flow and business activity rather than relying solely on tax returns. This makes it easier for businesses with seasonal income, recent startup status, or variable earnings to qualify.

Preserves working capital

By using a loan instead of your own funds, you can protect your working capital for day-to-day operations. A low-doc loan can be used to fund expansion, buy stock, or invest in marketing, allowing you to maintain liquidity while still pushing your business forward.

Tailored for self-employed borrowers

Specialist low-doc lenders tend to take a more hands-on approach. They understand the realities of self-employment and often offer repayment structures designed to match your income cycle. This personalised approach makes it easier to stay on top of your loan and reduce financial stress.

If your business doesn’t fit the mould of a traditional borrower, a low-doc loan might be a smart alternative. With the right lender and documentation, it’s possible to access the funding you need on terms that work for your business. Talk to your finance broker to find out more.

Despite elevated interest rates causing stress to borrowers, trust in brokers remains high.

According to the Consumer Access to Mortgages 2025 report, produced in partnership with the Finance Brokers Association of Australia (FBAA), nearly 60 per cent of borrowers will roll off fixed-rate loans in the next 12 months, potentially increasing financial pressure.

The report reveals a significant contrast between financial strain and consumer confidence in brokers, with 82 per cent of borrowers expressing trust in mortgage brokers compared to much lower confidence in bank staff.

First-home buyers are particularly reliant on broker services, with 43 per cent of future first-home buyers planning to use a broker when entering the market.

FBAA Managing Director Peter White AM said it was an evolving landscape for brokers amid economic changes.

“While brokers remain the preferred channel for many, shifting economic conditions and digital disruption are reshaping how borrowers think about their next home loan,” Mr White said.

The impending fixed-rate expiries present both challenges and opportunities in the property market. The report indicates that 57 per cent of mortgage holders will transition from fixed to variable loans within the year, with many facing significant increases in repayment amounts.

Despite financial pressures, refinancing activity is increasing. Sixteen per cent of borrowers have already refinanced their loans, while nearly half are actively considering this option to manage their financial situation.

Many households experiencing mortgage stress are still considering property investments or strategic moves rather than completely withdrawing from the market.

The report highlights a significant knowledge gap about broker services, with 40 per cent of consumers not fully understanding what mortgage brokers do. Nearly half incorrectly believe they will be charged fees for broker services.

This presents an educational opportunity for real estate professionals to provide value by clarifying the role of brokers and introducing trusted financial partners to their clients.

Trust has also become a critical factor in consumer decision-making, with 39 per cent of borrowers expressing “complete trust” in their broker compared to just 20 per cent for bank employees.

As interest rates remain elevated and economic pressures continue, the relationship between financial services and real estate is becoming increasingly intertwined, with consumers seeking trusted advisors to navigate complex financial decisions.

Australian housing values are gaining momentum with falling interest rates driving renewed growth in the property market.

According to the latest Cotality (previously CoreLogic) Home Value Index, national dwelling values rose 0.6% in June, marking the fifth consecutive month of growth. The June quarter saw values increase by 1.4%, up from 0.9% in the first quarter of the year.

Cotality’s research director, Tim Lawless, said the February rate cut was a clear turning point for the market.

“The first rate cut in February was a clear turning point for housing value trends,” Mr Lawless said.

“An additional cut in May, and growing certainty of more cuts later in the year have further fuelled positive housing sentiment, pushing values higher.”

Despite the upward trend, current growth remains modest compared to previous cycles. The quarterly growth rate of 1.4% is significantly lower than the 3.3% peak recorded in mid-2023 and the extreme 8.1% quarterly peak during the height of the pandemic.

The housing rebound is occurring despite relatively low sales activity, with housing turnover through the first half of the year tracking at an annualised pace of 4.9%, slightly below the decade average of 5.1%.

Advertised stock levels remain tight, tracking 5.8% below the same time last year and 16.7% below the previous five-year average, creating a more balanced market for buyers and sellers.

Across individual capital cities, Darwin led quarterly growth at 4.9%, with dwelling values reaching a new record high, finally surpassing the mining boom peak recorded in May 2014. Perth and Brisbane followed with quarterly growth of 2.1% and 2.0% respectively.

The rental market has shown a notable slowdown, with the national rental index rising just 1.3% through the June quarter, the lowest Q2 change since 2020. Annual rental growth has eased to 3.4%, down from a peak of 9.7% in November 2021.

Mr Lawless put this down to affordability constraints despite consistently low vacancy rates.

“Rental affordability is a key factor keeping a lid on rental growth,” he said.

“Assuming the median rent and median household income, rental households are now dedicating around one third of their pre-tax income to paying rent.”

Looking ahead, several factors are expected to shape the housing market for the remainder of the year. On the positive side, interest rates are forecast to fall further, possibly to the early 3% or even high 2% range by year’s end, which should improve consumer sentiment and borrowing capacity.

However, affordability constraints, elevated household debt levels, and a cautious lending environment may temper growth.

Buying an investment property can be a powerful wealth-building strategy, but only if you go in with your eyes wide open. While property can generate long-term capital growth and rental income, it also comes with a range of financial responsibilities.

Here’s how to determine whether you’re financially ready to invest.

Understand your borrowing capacity

The first step is knowing how much you can borrow. Your borrowing capacity depends on your income, expenses, existing debts, and credit history. A mortgage broker can assess your situation and give you a realistic picture of what lenders could approve. In addition to reviewing your current income and liabilities, your broker will consider whether you plan to use a cash deposit or equity from an existing property.

They’ll also run different scenarios to ensure your investment loan remains serviceable even during vacancy periods or when rental income fluctuates. They’ll assess how much you can afford to spend on repairs or upgrades, and advise on whether an interest-only, fixed, or variable loan suits your strategy. Once your financial situation is clear, your broker can help you get pre-approved for an investment loan, giving you confidence when you start looking at properties.

Factor in upfront and ongoing costs

Investing in property isn’t just about mortgage repayments. There are significant upfront and ongoing costs to consider. These may include stamp duty, legal and conveyancing fees, loan setup fees, pest and building inspections, and possibly lenders mortgage insurance (LMI) if your deposit is under 20%.

Once you own the property, regular costs can include council rates, water charges, strata or body corporate fees, property management fees, landlord insurance, maintenance, repairs, and land tax in some states. If your property is vacant, you’ll still need to cover these costs without rental income, so creating a buffer to cover at least three months of expenses is highly recommended.

Budget realistically for repairs and renovations

It’s easy to underestimate the cost of repairs or upgrades. Whether it’s cosmetic work to boost rental appeal or essential repairs like plumbing or roofing, costs can quickly add up. Always overestimate renovation expenses and build a contingency fund. Renovations can also add to your borrowing power if managed correctly.

Your broker can help assess whether it’s worth refinancing or topping up your loan to cover improvements. Just be sure to weigh the expected rental return and potential capital growth against the upfront cost.

Understand rental income expectations

When lenders assess your loan application, they factor in projected rental income, but often only at 70 to 80 per cent of the estimated figure to account for vacancy and expenses.

Check recent rental listings for similar properties in the area to get a realistic sense of income. Consider the suburb’s vacancy rate and how seasonal factors might impact demand. Some suburbs have high rental turnover or drop in popularity during certain times of the year.

Plan early

Working with a mortgage broker early in the process gives you clarity and confidence. The key is planning well, understanding your cash flow, and building a buffer for the unknowns.

Talk to a mortgage broker today to find out what’s possible for you.