Private credit steps up: Backing Australia’s housing push with smarter capital
The 25–26 Federal Budget delivers clear intent: Housing supply, affordability & construction workforce development are now front and centre.
With a $33Bn commitment and targeted initiatives, the incumbent Government is mobilising support for long-term structural improvement in a concerted effort to address both availability and affordability of residential accommodation.
These latest initiatives present opportunity for Australia’s ~$205Bn private credit sector, specifically the ~$87Bn real estate private credit segment, where capital is increasingly stepping in, as banks continue to pull back owing to regulatory and capital constraints, and NBLs fund the predicted 280,000 national dwelling residential accommodation shortage.
While private credit accounts for just ~17% of the total Australian Commercial Real Estate Debt Market (compared with ~50% in the US and ~40% in Europe), that share is growing—and with it, investor interest.
The fundamentals for providing capital remain compelling:
- house and unit prices continuing to increase
- demand outstrips supply and average rental vacancies remain at less than 1%
- bank total mortgage delinquencies is around 40% lower (0.91%) than six months ago (1.51%)
- 90+ day mortgage arrears at 0.41%, around half of their March 2019 figure
- ASIC stats to February 2025 reflect construction insolvencies trending down
- ABS’s latest GDP data to December 2024 showing YoY economic growth of 1.6%2
- Real estate developers and investors may enjoy further reductions in interest rates over time.
At Zagga, we focus capital deployment in the most conservative parts of the real estate private credit universe: funding experienced, repeat business with property developers and investors, in core eastern seaboard markets with deep liquidity, essential housing demand, and resilient economic fundamentals. We avoid speculative assets and seasonal or highly cyclical sectors—focusing instead on transactions where there is clear line-of-sight on delivery, exit, and return.
Having invested in excess of $2Bn and repaid over $1Bn, we at Zagga continue to believe that private credit anchored by high-quality real estate assets and strong counterparties, offers a credible, risk-adjusted income solution for sophisticated and wholesale investors.
Never miss an update
Enjoy this wire? Hit the ‘like’ button to let us know.
Stay up to date with my current content by
following me below and you’ll be notified every time I post a wire
Alan has more than 30 years’ experience in banking and finance, following a short stint as a legal practitioner, with work experience in the UK, South Africa and Australia. His many and diverse roles include C-suite positions in two-listed banking groups in South Africa, CEO of South Africa’s third largest private client wealth manager, Director of a Superannuation Risk and Operations consultancy, a consultant to Westpac, and as MD of a ‘home loan over the phone’ business established for Real Insurance and Macquarie Bank. He has consulted widely to owner-managed businesses across strategy, technology and operations and co-founded Zagga in 2016, where he is a Member of the Zagga Investment Risk Committee, Zagga Credit Oversight Committee, and Zagga Compliance Committee, and a Responsible Manager (AFSL / ACL).
........
1. asic-insolvency-statistics-series-1-and-series-2-published-24-march-2025.xlsx
2. https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release
This article is for information purposes only. It does not take into account your objectives, financial situation or needs. Any opinion expressed in this article are of the author and is subject to change without notice. Readers are reminded to exercise caution and use their own judgment when interpreting and applying the information contained in this article.
.jpeg)
5 topics
.jpeg)
Alan has more than 30 years’ experience in banking and finance, following a short stint as a legal practitioner, with work experience in the UK, South Africa and Australia. His many and diverse roles include C-suite positions in two-listed banking...
Expertise
No areas of expertise
Alan has more than 30 years’ experience in banking and finance, following a short stint as a legal practitioner, with work experience in the UK, South Africa and Australia. His many and diverse roles include C-suite positions in two-listed banking...
Expertise
No areas of expertise
Comments
Comments
Sign In or Join Free to comment
most popular
Equities
Why ex-20 is the prime hunting ground for ASX returns
Livewire Markets