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Borrowing capacity now key concern for investors
Forget hotspots and market uncertainty; investors looking to transact today are facing a new major challenge, as weakened borrowing capacity dictates their portfolio plans.
As property investors navigate the second half of 2026, many have become more cautious about the market, with declining borrowing capacity shifting sentiment.
According to the Right Property Group’s (RPG) Australian Investor Sentiment Report, borrowing capacity has been identified as the defining challenge faced by investors in today’s market.
52 per cent of respondents ranked it as their biggest challenge, ahead of cash flow, serviceability, market uncertainty and finding a suitable property.
RPG director Victor Kumar said the data reinforced a well-observed trend in the property market.
“Investors are not losing faith in property, but they are losing access to finance - predominantly due to the recent taxation policy changes,” Kumar said.
“The fundamentals remain solid, but borrowing has tightened so sharply that seasoned investors are reshaping their strategies across the board.”
When it came to the most influential factors in decision-making for investors, personal circumstances remained the strongest at 35 per cent, closely followed by government policy at 34 per cent.
While once acting as a dominant force in investor sentiment, interest rates now only registered a minor concern, polling only two per cent.
Similarly, 43 per cent found that their borrowing capacity had decreased over the past 12 months, while 36 per cent reported no change.
The data found almost half of respondents reported a drop in confidence compared to twelve months ago, with only one-in-five feeling more confident.
Despite the drop in sentiment surrounding the market, 41 per cent of investors intended to make a purchase in the next 12 months.
Additionally, the majority of investors anticipated prices to fall over the next 12 months.
Right Property Group co-founder Reshmi Kumar said that investor sentiment aligned with the softening already occurring across many property markets.
“This is not a crisis of confidence, but it is a crisis of conditions. Investors feel financially secure, but they feel constrained by policy settings and the new lending rules,” she said.
“They’re not asking whether property still works, but they are asking how to keep moving under the new settings.”
The survey found that the sentiment around commercial property had soared, with 23 per cent of respondents naming it as their preferred asset type, second to residential.
Victor Kumar said the increase in interest in commercial assets had been spurred by the pursuit of yields and stability driven by the changes to negative gearing and CGT.
Despite the headwinds, investor activity remains real, with many continuing to transact.”
“This means that the next phase of the market will be shaped by those who reset their strategy deliberately rather than reactively,” Kumar concluded.
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