Stamford Capital Survey Reveals Banks Back to Construction Lending as Presales Hit Record Lows
Leading commercial property finance group Stamford Capital has released the results of its 2026 Debt Capital Markets Survey – the first official dataset to measure commercial property lending sentiment since the Middle East conflict began in February.
A leading barometer of market trends since 2018, the annual Debt Capital Markets Survey canvasses the opinion of110 lenders including major and second-tier banks and non-banks. The 2026 survey is the 10th in the series and examines the impact of the last 12 months on debt capital markets, forecasting expectations for FY27.
Survey data reveals that despite lenders’ approach to risk tightening in response to the Middle East conflict, appetite remains resilient – with a massive 94.5% planning to grow their loan books in 2026. This is the second-highest result on record, only slightly lower than the 97% predicting loan book growth in 2025.
Stamford Capital’s Survey also spells good news for the construction sector, with nearly 62% of respondents anticipating major banks to increase construction lending. Presale thresholds are now the lowest they have been in the Survey’s nine-year history – helping improve feasibility for residential developers and tipped to spur a welcome boost to supply amid Australia’s ongoing housing crisis.
“Australia remains a safe haven for real estate debt, with lenders responding to geopolitical headwinds by tightening risk settings rather than pulling back. The post-COVID wave of new lenders also drove sharp margin compression, but banks are increasingly in pursuit of deals, with competition now about structure rather than price,” said Peter O’Connor, Managing Director at Stamford Capital.
And Australia’s fast-growing private credit sector continues to attract attention, with Survey data revealing 88% are concerned about its practices, compared to just 69% in 2025. Despite ASIC’s increased interest in the sector, private credit lenders are not slowing down.
Middle East Conflict Tempers Risk Appetite – Not Credit Supply
Lenders are doubling down on growth ambitions, with 94.5% of respondents planning to expand their loan books in 2026, and over 69% seeking an increase of at least 15%. When asked a few weeks later, 56% of Stamford Capital’s Survey respondents said the Iran war has changed loan appetites, or risk profiles – or both. The RBA’s return to hiking interest rates adds further challenges to Australia’s lending landscape.
Of those respondents, 36% say it has affected their risk profile only, leaving their appetite for deals intact. The data reveals the biggest concern is rising input costs, especially for oil-dependent construction materials like asphalt, piping and steel – followed by the downstream impacts of inflation on interest rates and serviceability.
In response to heightened uncertainty, lenders are recalibrating risk settings and intensifying due diligence. This includes stress-testing borrowers against further rate rises, scrutinising cost inputs, and increasing funding contingencies. Some lenders are even witnessing ‘war clauses’ being added into construction contracts by developers to manage cost escalation risk.
“The Iran conflict has added a new layer of complexity for lenders. Anecdotally, it’s been less about pulling back and more about being more selective in how capital is deployed. There is still an abundance of capital in the market, but it’s being allocated with a higher degree of scrutiny and greater protections against ongoing volatility,” said Mr. O’Connor.
The impact is pronounced among non-bank and private lenders, where over half of respondents say the war is influencing decision-making. Second-tier banks are evenly split, while 59% of major banks report no material change, albeit with increased scrutiny on cost assumptions and contingencies.
A Lifeline for Builders as Banks Return to Construction Lending
The return of major banks to construction lending – foreshadowed in Stamford Capital’s 2025 Survey – is ramping up. Some 62% of respondents expect banks to increase construction lending in 2026, an increase of 35% on last year’s Survey.
Investment lending expectations for banks are similarly strong, with 64% expecting increases. 36% expect banks to loosen construction credit criteria, while 32% expect relaxing of investment credit criteria. Both figures show the competition banks face re-entering the market.
“Banks are catching up with non-banks, and it’s putting real pressure on credit settings as lenders compete for market share. For developers, this could mean more competitive terms, as banks soften their approach in pursuit of high-quality deals,” said Mr O’Connor.
In contrast, non-bank expectations have moderated. Over 65% expect non-banks to increase construction lending (down from 73% in 2025), and 53% tip growth in investment lending (down from 65%). While non-banks dominate the construction lending landscape, expectations for construction lending growth are aligning with the major banks.
In NSW, iCIRT continues to embed itself in lending practice. More than 59% of NSW respondents now consider iCIRT ratings when assessing loan applications, steadily increasing from 49% in 2025 and 33% in 2024.
Presales Lowest on Record as Loan Margins Hold
Against a backdrop of intense competition across the debt market, presale requirements are now the lowest they have been since Stamford Capital’s Survey began in 2018. This is earmarked to improve development feasibility and help industry meet the national Housing Accord target of 1.2 million new homes by 2029.
Over 37% of construction lenders now require zero presales – up from 29% in 2025,
with over a quarter of lenders requiring 35-60%, up from 18% last year. Just 8.1% of lenders require presales of 60-100%, while just five years ago almost half (45%) of lenders had these targets.
Stamford Capital says this reflects that while competition for high-quality sponsors and projects remains intense, pricing is no longer the sole lever. Some 70% of lenders are competing through a mix of pricing, leverage and relaxed conditions, rather than margin alone.
“Lenders now have fewer moves to win deals. We’re seeing greater willingness to back projects earlier, which helps feasibility – one of the biggest bottlenecks to delivery. As those settings ease, more projects are likely to stack up and move forward, which is critical in the current supply-constrained environment,” said Mr. O’Connor.
Meanwhile, after a year of aggressive repricing, loan margins appear to have found a floor. While 62% of respondents expected them to compress in 2025, 76% expect them to hold steady in 2026 and just 12.5% anticipate further decreases.
62% of respondents expect banks’ construction loan margins to remain stable, with 23% anticipating decreases. Sentiment around construction loan margins for non-banks is mixed – 28% expect decreases, 26% increases and 45% maintenance.
Pressure on Private Credit Intensifies as ASIC Acts
Concern over Australia’s private credit bubble has increased, with 86% of Survey respondents questioning the practices and rapid growth of the sector – up from 69% in 2025.
Respondents cite aggressive lending by inexperienced operators, stretched LVRs, poor compliance and inflated valuations – complaints that have led ASIC to target these practices as a priority in 2026.
The regulator is now following through, with 35% of non-bank and private lenders surveyed having been approached or audited by ASIC. A third of respondents say their due diligence approach has already changed in response, with 5% planning changes within 12 months.
But like the Iran conflict, this hasn’t slowed deal appetite. 55% of respondents report no impact from ASIC on their willingness to fund certain deals, with only 5% describing the impact as material. A further 22% say the impact has been selective, reflecting some variation in experience across different market segments.
AI Enters the Lending Mainstream
AI use has been measured in Stamford Capital’s Survey for the first time, with the data revealing that 88% of respondents use AI tools.
“The commercial property sector is complex and material. No two assets or scenarios are the same. AI is streamlining back-office administration but ultimately can’t replace the people who do the deals. It does transform laborious data collection and assessment, and this could lead to faster transactions or sharper margins,” said Mr O’Connor.
Markets Overview: Office Back in Business, Residential on the Rise
Australia’s commercial office market continues to rebound, with 64% of Survey respondents seeing the sector in recovery. This is virtually unchanged from 63% last year, but a sharp turnaround from 2023, when 63% believed the market was in decline.
In a welcome sign amid Australia’s housing shortage, the residential market shows its strongest signs of momentum since 2021. 45% of respondents identify the sector as being in an early growth phase. But sentiment around residential development sites is more divided, with 33% tipping the sector for early growth while 32% believe it has peaked.
Similarly, the retail sector shows renewed confidence, with 35% of lenders seeing it in an early growth phase and a further 29% viewing it as being in recovery.
In contrast, industrial appears to be losing steam, with 64% of respondents believing the sector has reached its peak.
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