The gambler’s secret to surviving property investment

Tax reform, rate rises and tightening yields have turned residential investing into a game of judgement rather than momentum, and mortgage brokers are being asked to referee it

KENNY ROGERS' Grammy Hall of Fame song The Gambler contains a lesson that applies as well to investment property as it does to cards. His message is all about recognising that every situation can be played for better or worse, and the key to success is knowing what is worth keeping and what is not. For the longest time, the residential property investor market in Australia hasn’t required a lot of deep thought. It has marched ever upward with only a few interruptions and made a lot of retirements more comfortable. But the once-reliable rhythm of buying, holding and watching capital appreciation work its magic has now been disrupted by the return of rising interest rates, the most significant tax changes to residential property investment in a generation and a structural squeeze on net yields as insurance costs and holding expenses climb. With these forces converging at once, investors are having to work out what to hold and what to fold. A market reset Investor lending hit record levels through 2025, accounting for more than 40% of all new home lending in both the September and December quarters, according to PropTrack and Westpac data. The investor segment grew 18.9% year on year, outpacing owner-occupier growth of 12.5%. But conditions have begun to shift. The March 2026 quarter saw new investor loan commitments fall 5.3% in number and 3.0% in value, according to the Australian Bureau of Statistics (ABS). The June quarter saw steeper falls of 8.6% in number and 10.2% in value compared to the March quarter, and early signs suggest that the September quarter is likely to continue this trend.

Delvescovo does not read the slowdown as investors losing their nerve. “Some moderation was probably inevitable after the exceptionally strong investor activity we saw through 2025,” he says. “To me, that points to a market that is normalising rather than weakening. Investors are responding to a changing environment that includes tax reform, debt-to-income limits and affordability considerations, but the underlying drivers of investor demand remain intact,” he says. Baber Zaka, general manager of third-party banking at Commonwealth Bank, agrees. “I see it as a healthy recalibration rather than a change in direction. After a period of exceptionally strong investor activity, it’s natural to see lending return to more sustainable levels ... in many ways, that’s a positive sign,” he says. Ashley Milne, regional manager broker, north (NSW ACT, QLD and NT) at BOQ Group, which includes ME Bank, sees a similar shift towards portfolio management rather than pure acquisition. “While acquisition activity remains an important part of the market, we’re seeing a growing focus on portfolio optimisation. Many investors have benefited from property value growth and are using that opportunity to review lending arrangements, reassess equity positions and plan their next move,” says Milne. Compared with 12 months ago, he says investors are taking a more considered approach, spending more time ensuring a property aligns with their financial position, borrowing capacity and long-term goals.

The law changes The late-June overhaul of negative gearing and capital gains tax means that from 1 July 2027, negative gearing on established residential properties purchased after 12 May 2026 will be restricted. Losses can no longer be offset against wages or salary, only carried forward against future residential property income. New builds retain full negative gearing entitlements. The existing 50% CGT discount will be replaced by cost-base indexation, with a minimum 30% tax on real capital gains, for all assets except new builds where investors can choose between the two methods. Zaka says the changes have not altered the basics of good strategy but only added another layer to it. “Whenever there are significant policy changes, it’s natural for investors to reassess their options and seek more information. What we’re hearing from brokers is that customers are asking more questions about how the changes may affect their circumstances and investment strategies,” he says. “While policy settings can influence market activity, investment decisions are typically shaped by a range of factors, including individual objectives, financial circumstances and broader market conditions,” he adds.

Rates: the unwinding of 2025’s relief After delivering three cuts through 2025, the Reserve Bank of Australia reversed course and raised the cash rate three times in 2026 – in February, March and May – taking it to 4.35% and effectively unwinding all of the previous year’s relief. On an average loan of $736,000, each 25-basis point increase adds roughly $120 a month to repayments, meaning three hikes add around $360 per month compared to the start of the year. Zaka has watched that shift play out with his own investor clients. “Today’s investor market is more measured. Broker feedback indicates investors are spending more time researching opportunities, assessing cash flow and seeking advice before making decisions,” Zaka says.

“We’re also seeing investors place greater emphasis on portfolio resilience and long-term objectives. For brokers, that means conversations are increasingly focused on lending structures, borrowing capacity and flexibility, rather than simply responding to a fast-moving market,” he says. Milne is seeing investors respond to higher repayments by revisiting their existing loans rather than stepping back altogether. “While activity has moderated, investors remain active and focused on opportunities that can deliver sustainable long-term value. We’re also seeing investors review existing lending arrangements to improve value, support cash flow and ensure their loan structure aligns with their broader strategy,” Milne says.

ING entered the Australian market in 1999, helping redefine digital banking with its innovative online savings account. Today, it supports more than 2.5 million active customers across banking, home loans, consumer lending, superannuation and insurance. Since launching home loans in 2000, ING has continued to evolve its offering, introducing innovations such as the Mortgage Simplifier and Orange Advantage Offset loan. More than 95% of ING home loans are introduced through mortgage brokers, making the broker channel central to its growth strategy and a key driver of product development and customer-focused solutions.

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For over 30 years, ME has helped Aussies achieve their homeownership goals. In 2021, ME joined BOQ Group, a thriving network of challenger brands, transforming how customers and brokers do their banking. Our strong broker relationships mean we can get to ‘yes’ quickly and smoothly with great pricing and the support of your business development manager to make things happen.

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Pannek’s concern sits less with any single measure than with how they stack up together. “We’ve consistently highlighted concerns about the cumulative impact of the reforms, including changes to negative gearing, capital gains tax and borrowing through self-managed super funds. Individually they may appear manageable, but together they have the potential to influence investor confidence and housing supply,” she says. Delvescovo says the practical effect is already visible in how investors are approaching new purchases. “It’s still relatively early, but we’re seeing investors spend more time assessing where they deploy capital and what type of property best aligns with their objectives,” he says. “Anecdotal feedback from brokers suggests the changes have prompted more conversations about the relative merits of new and established properties. The reforms have created a clear distinction between the two, while also prompting some investors to explore alternative asset classes, including commercial property.”

At CommBank, we’re focused on giving our brokers more confidence, delivering an exceptional experience for them and their customers. We are doing this by being reliable, transparent, accessible and adaptable. Our strategy has been designed based on broker feedback and focuses on how we can improve the experience and build a strong and more sustainable third-party banking channel. If you’re not already accredited with CommBank, now is a great time to join us as we’ve simplified our accreditation process. Head to www.commbank.com.au/home-loans/broker-accreditation.html and find out more. If you're already accredited with CommBank, check out our 24/7 training hub – it’s all part of our commitment to give you more confidence to build your business and deliver an exceptional homebuying experience to customers.

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“Broker feedback indicates investors are spending more time researching opportunities, assessing cash flow and seeking advice before making decisions”

Baber Zaka, CommBank

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Major banks reported double-digit falls in mortgage applications for the June quarter with the outlook for investor housing credit growth in 2027 expected to drop off by half from 2026. “The investor market is in a significant period of adjustment,” says Anja Pannek, chief executive officer of the Mortgage and Finance Association of Australia (MFAA). Twelve months ago, there was strong momentum, she says, but investors are now taking a more measured approach as they weigh the federal budget’s tax reforms alongside higher borrowing costs and broader economic uncertainty. Sergio Delvescovo, national sales manager and broker at ING Australia, points to the lodgement figures his bank is tracking. “The investor market is navigating a period of adjustment following the federal budget changes and as a result is becoming more selective and strategic than it was 12 months ago,” Delvescovo says. Recent NextGen data shows investment lodgements are down 27% compared with the same period last year. This compares to the year before, when lodgements were running 30% higher year on year.

“Investors are spending more time understanding how an investment will perform over the long term. That includes rental yield, cash flow, long-term-growth potential and how the lending side of the equation works”

Sergio Delvescovo, ING Australia

Industry experts

Sergio Delvescovo

ING Australia

Ashley Milne

ME Bank

Anja Pannek

Mortgage and Finance Association of Australia

Baber Zaka

CommBank

Baber Zaka is general manager of third-party banking at Commonwealth Bank, where he leads broker partnerships with a focus on transparency, collaboration and delivering value. With over a decade at CommBank, he has held senior leadership roles across distribution strategy and operations. Zaka brings a strong background in financial analysis, strategic planning and deal management, honed through experience at NBN, Virgin Money, RBC and KPMG. He holds a bachelor of science in economics and philosophy from the London School of Economics. Known for his broker-first mindset, Zaka champions innovation and trust within the lending ecosystem.

CommBank

Baber Zaka

Anja Pannek is chief executive officer of the Mortgage and Finance Association of Australia (MFAA), the peak national body representing the mortgage and finance broking industry. Since joining the MFAA in September 2022, she has led the association’s advocacy, professional standards and member engagement agenda, supporting an industry that now facilitates a record 81% of all new residential home loans in Australia. Pannek has more than 20 years of experience in financial services, including senior leadership roles with PLAN Australia, NAB, Loan Market Group, Advantedge Financial Services and Challenger Limited. She is a passionate advocate for competition, professionalism and better consumer outcomes.

Mortgage and Finance Association of Australia

Anja Pannek

Ashley Milne is regional manager broker, north (NSW ACT, QLD and NT) at BOQ Group, which includes ME Bank. With nearly two decades of experience in financial services, Milne plays a key role in driving broker growth and strengthening strategic partnerships across the broker channel. Having held leadership positions across the BOQ Group brands, Milne is recognised for building high-performing teams and fostering a collaborative, people-first culture. Committed to developing talent and supporting broker success, Milne is known for a relationship-led approach and a focus on delivering strong outcomes for brokers and their customers.

ME Bank

Ashley Milne

Sergio Delvescovo is national sales manager and broker at ING Australia, where he leads the national broker sales team and works closely with aggregators, brokers and industry partners to help drive sustainable growth. Based in Sydney, Delvescovo is a passionate advocate for the broker channel and plays a key role in shaping ING’s broker strategy, proposition and partnerships. He is focused on delivering competitive solutions, consistent service and better outcomes for brokers and customers. With a strong emphasis on collaboration and listening to broker feedback, Delvescovo is committed to strengthening ING’s position as a trusted and valued lending partner.

ING Australia

Sergio Delvescovo

Published 31 Aug 2026

Source: ABS Lending Indicators

Value of new investor loan commitments for dwellings (seasonally adjusted)

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Investors today are navigating tax reform, evolving lending requirements, debt-to-income limits and a wider range of funding options than ever before. The value brokers provide goes well beyond securing a competitive rate, he adds, extending to structuring debt, assessing borrowing capacity and identifying future opportunities. All this expertise helps underpin investor confidence. “The role of brokers has continued to evolve as customer needs and market conditions have become more complex. Investors are often seeking support to understand lending options, structure their finances appropriately and navigate an increasingly dynamic market environment,” says Zaka. “The value brokers provide extends beyond securing a loan. They’re helping customers make sense of changing market conditions, understand their options and connect with the right lending solution for their circumstances. That trusted guidance remains highly valued by property investors,” he adds. Milne describes the same evolution from his own vantage point within the broker network. “Today’s investors are navigating an increasingly complex lending environment, which has elevated the broker’s role from finance arranger to trusted partner. Brokers are increasingly acting as strategic advisers, helping investors navigate lender policy differences, structure lending effectively and identify opportunities that support their long-term goals,” Milne says. As borrowing capacity assessments and investment considerations become more complex, he says, investors are increasingly turning to brokers to help them understand their options and make informed decisions.

“Investors are paying closer attention to income, existing liabilities, available equity and overall portfolio objectives when evaluating their next opportunity. Prudent lending standards remain an important part of supporting long-term-customer outcomes,” Milne adds. Importantly, the DTI cap does not apply to non-bank lenders. Pannek expects that distinction to keep shaping where investor business flows. “I think we’ll continue to see strong competition between banks and non-bank lenders, and that’s ultimately good news for consumers,” she says. Non-bank lenders have shown they are prepared to innovate and provide flexibility for borrowers with more complex circumstances, Pannek says, while banks continue to play an important role across mainstream lending.

“The real winner is the consumer because mortgage and finance brokers have access to both markets. Their ability to compare lenders and recommend the most appropriate solution has never been more valuable,” Pannek says. Delvescovo sees the split settling along scenario rather than lender type. “Both banks and non-banks play an important role, and we expect investors will continue to utilise both depending on their circumstances,” he says. “Non-banks often provide solutions for more specialist scenarios, while banks continue to be highly competitive for mainstream investors seeking sharp pricing, strong servicing and long-term lending relationships.” Milne agrees that the investor lending market is becoming more contested, with brokers casting a wider net to find the right fit for clients. “The investor lending market is becoming increasingly competitive, with both banks and non-banks playing an important role in supporting different customer needs,” he says. Investors have more choice than ever, he adds, and success comes down to delivering the right combination of competitive pricing, policy flexibility, strong service and lending solutions that meet customer needs. The broker’s role Pannek says the shift in what investors expect from their broker has been one of the more significant changes of the past few years. “The role has changed considerably. A few years ago, the conversation was often about securing a competitive interest rate. Today it’s much broader than that,” Pannek says. “Investors are navigating changing policy settings, different lender appetites and a much more complex lending environment. Mortgage and finance brokers are helping clients understand their options, challenge assumptions, work through different scenarios and connect with other professionals where appropriate,” she says. Delvescovo describes the same shift from the lender’s side of the desk. “The broker’s role has become significantly more strategic and solutions-based. Brokers are increasingly acting as trusted advisers rather than simply arranging finance, helping investors navigate policy changes, lending requirements and long-term portfolio decisions,” he says.

The bank and non-bank divide APRA activated its debt-to-income (DTI) cap in February 2026, limiting authorised deposit-taking institutions to writing no more than 20% of new residential mortgages at a DTI of six or above, with investor and owner-occupier portfolios assessed separately. This has led to more sustainable lending and reduced risk. “The introduction of debt-to-income measures has increased the focus on borrowing capacity and serviceability earlier in the customer journey,” says Zaka. “Brokers are playing an important role in helping investors understand what they may be able to achieve before they begin looking for their next property. “We’re seeing customers come to conversations better prepared, with a clearer understanding of their financial position and lending options. That can help streamline the application process and support more informed borrowing decisions,” he adds. Milne has observed a similar pattern among BOQ Group’s broker network. “Rather than reducing investor interest, DTI limits have prompted a greater focus on long-term affordability and ensuring proposed investments align with a borrower’s broader financial position and investment strategy,” he says.

"We’re already seeing growing interest in commercial lending, and I think that trend is likely to continue. For brokers, that’s a real opportunity to broaden the services they provide to clients”

Anja Pannek,Mortgage and Finance Association of Australia

Commercial property: a structural shift The negative gearing restriction applies to residential only. Commercial property retains full negative gearing treatment under the new law, a distinction the market has moved quickly to price in. Industrial property was the only sector to record yield compression across every capital city in both Q1 2026 and the year to March, supported by e-commerce growth, tight land supply and supply chain disruptions driving warehouse demand. Some brokers are seeing what has been described as a ‘tsunami’ of investor interest in commercial following the tax changes. Pannek says the interest is real, if still early. “We’re already seeing growing interest in commercial lending, and I think that trend is likely to continue,” she says. “For brokers, that’s a real opportunity to broaden the services they provide to clients. It also reinforces why ongoing education is so important.” Brokers currently write a record 81% of residential home loans, according to MFAA data, yet commercial penetration remains far lower. The combination of record residential market share and a budget-driven shift in investor behaviour has made the case for diversification into commercial lending harder to ignore. The MFAA’s response has been to invest directly in broker capability. “The MFAA has invested in commercial and asset finance education because we want our members to feel confident supporting clients across a broader range of lending scenarios,” Pannek says. As the market evolves, she adds, broker capability needs to evolve alongside it.

What comes next The outlook for property prices has cooled from earlier in the year. Cotality's national Home Value Index fell 0.4% in June and 0.7% in July, for the steepest monthly drops since December 2022, with capital city values down 1.3% over the June quarter. Sydney and Melbourne led the pullback in June, with Adelaide and Brisbane joining the fall in July. While Perth is still recording monthly gains, they are well below last year’s pace. Year-on-year figures are still positive, with the exception of Sydney and Melbourne among capital cities. Auction clearance rates fell below 50% in late June for the first time since the 2020 lockdowns and had dropped to the low 40%-range by late July. Ray White data shows the investor share of auction buyers dropped to as low as 20.7% in late June, recovering slightly off that low base more recently but still well below levels from 12 months prior.

You got to know when to hold ’emKnow when to fold ’emKnow when to walk awayAnd know when to run(Kenny Rogers, The Gambler, 1978)

+16%+6.9%+12.7%+31.8%+25.3%+8.1%

Jan–Mar 2025Apr–Jun 2025Jul–Sep 2025Oct–Dec 2025Jan–Mar 2026Apr–Jun 2026

Change vs same quarter 12 months prior

Change vs previous quarter

Investor internal refinancing ($bn)

Quarter

32.432.939.843.041.537.1

-0.3%+1.4%+17.6%+7.9%-3.0%-10.2%

The Mortgage and Finance Association of Australia (MFAA) is the leading professional association for the mortgage and finance broking industry and has more than 16,000 members. Our membership spans stakeholders from across the mortgage and finance broking industry. Over 97% of our members are mortgage and finance brokers. We also represent aggregators, lenders, mortgage managers, mortgage insurers and other suppliers to the industry. Our purpose is to empower our members to prosper and thrive, ensuring Australians benefit from competition and choice. We support our members and the industry through advocacy, education and promotion of the broker value proposition to consumers.

Source: Cotality

+1.0% +16.3% +9.3% +20.5% +10.5% +14.8% -2.8% -2.0% +5.3%

Canberra Darwin Hobart Perth Adelaide Brisbane Melbourne Sydney Australia

Change in dwelling valuesfor year to July 2026

There is a view among economists that things will start to improve in 2027 when the RBA is expected to cut rates if inflation eases. But this is tempered by expectations for weaker investor housing credit growth as the negative factors work through the system. There is also a minority view that structural reasons exist for a larger drop in values or for a long, slow-burn, New Zealand-style housing downturn in Australia this time around. For now, lenders are holding out hope that the fundamentals underpinning investor demand haven’t gone anywhere. “Australia continues to face housing supply constraints, with population and strong rental demand in many areas. Those fundamentals continue to support long-term investor interest in residential property,” says Delvescovo. Both winning and losing are possibilities in property investment – that has always been the case. The odds have been kind to investors for many years, but there is no doubt the calculus today is not what it was 12 months or even six months ago. In a high-stakes game, the key is knowing when to hold and when to fold, something that generally requires expert advice. That is the gambler’s secret: having a good broker on speed dial. Property investment is no place for amateurs anymore.

For Milne, the tax advantage attached to new builds has not translated into a rush of demand. “Some investors are considering new builds as part of their strategy, particularly where the overall investment proposition aligns with their financial goals. However, the decision between new and established property remains highly individual and depends on the investor’s circumstances, objectives and the type of property that best suits their needs,” he says. Broker conversations do suggest growing interest in new builds as investors look to make the most of available incentives, he adds, though tax benefits are generally one part of a broader decision that also includes location, rental demand, cash flow and long-term-growth potential. Industry sentiment sours That caution is showing up beyond the transcripts of individual lenders. A live poll of more than 500 legal, financial, banking and property professionals found three-quarters of respondents expect a significant number of residential investors to sell up or stop investing altogether, and 78% expect the reforms to push property values down. Fewer than one in 10 respondents believe the changes will do anything to improve housing supply. The view among professionals who advise, finance, value and regulate property transactions is that the reforms will reduce investor participation without lifting housing supply. The tax changes arrive at a moment when the numbers on established residential property are already tight. Cotality data shows national gross rental yields have recovered from a dip at the end of last year to 3.7% in July. This is the highest level since April 2023, but with typical variable mortgage rates around 6%, most capital city investors are still running a cash-flow loss and relying on capital growth to justify the hold. Sydney gross yields are the lowest among capital cities at 3.3% – well below the cost of debt. Beyond interest and taxes, the cost of simply owning an investment property has risen sharply. Australian home insurance premiums have climbed 51% over the past five years, according to data analytics firm Finity, with the average home and contents policy rising approximately 14% in 2025 alone, from $2,452 to $2,795 nationally. Construction costs across Australia rose approximately 40% between 2020 and 2025, and higher rebuild costs flow directly through to higher insurance premiums. A March 2026 report by the Actuaries Institute found that 15% of all Australian households now face home insurance affordability stress. Delvescovo says the calculation investors are running has broadened well beyond the tax line. “Investors are spending more time understanding how an investment will perform over the long term. That includes rental yield, cash flow, long-term-growth potential and how the lending side of the equation works,” he says. Investors are seeking advice earlier in the process and looking more closely at the trade-offs before making decisions.

“Brokers are increasingly acting as strategic advisers, helping investors navigate lender policy differences, structure lending effectively and identify opportunities that support their long-term goals”

Ashley Milne, ME Bank