Private credit steps up: Backing Australia’s housing push with smarter capital

Picture of Article by Alan Greenstein<br>28 March 2025
Article by Alan Greenstein
28 March 2025

The 2025–26 Federal Budget delivers clear intent: housing supply, affordability and construction workforce development are now front and centre of the national agenda.

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.

federal budget

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%
Source: ABS
Source: ABS
  • 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
Source: MPA
Source: APRA

Construction Insolvencies

Source: ASIC1
  • 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.

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

Articles (including white papers and audio or video content) and FAQs on this website have been prepared by Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786 (Zagga) for general information only. They do not take into account your objectives, financial situation or needs, and are not a substitute for accounting, tax or other professional advice. Nothing in these articles or FAQs is an offer or solicitation to buy or sell a financial product, nor a recommendation to enter into or refrain from any transaction.

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The growth of Australia’s real estate private credit market is gaining significant attention, with the segment forecast to near $90 billion by the decade’s end. In this Ausbiz

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We would like to acknowledge the Traditional Custodians of the lands, seas, and communities in which we provide our services. We would also like to pay our respects to the Elders past, present and emerging, and the continuing cultural influence they have on Australia.

Zagga Market Pty Limited (Australian Credit Licence 490904) ACN 611 662 401 acts as the Servicer of loans acting on behalf of the credit provider, Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786, trustee of the Zagga Investments Lending Trust

Additional Information

All portfolio numbers quoted correct as at 31 December 2025.

*Average investor return across the active portfolio as at 31 December 2025.

**Target return is after expenses and any applicable management fees for the year ended 30 June 2026. OCR = Australian Reserve Bank Official Cash Rate.

Past performance is not a reliable indicator of future performance, and should not be taken as an indication or guarantee of future results. Investments involve risk, fees and costs, and returns are not guaranteed. No representation or warranty is made regarding future performance, and economic conditions may change.

Prospective investors wishing to invest in a Zagga direct investment or a Zagga Fund should fully consider the Information Memorandum, ZFF Fact Sheet and/or ZWF Brochure, available from Zagga, before applying to invest. Investments are subject to risks.

Articles (including white papers and audio or video content) and FAQs on this website have been prepared by Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786 (Zagga) for general information only. They do not take into account your objectives, financial situation or needs, and are not a substitute for accounting, tax or other professional advice. Nothing in these articles or FAQs is an offer or solicitation to buy or sell a financial product, nor a recommendation to enter into or refrain from any transaction.

Any analysis provided in the articles (including white papers and audio or video content) or FAQs on this website is based on information believed to be reliable, however Zagga does not represent or warrant that it is accurate, complete or up to date. Zagga is not obliged to update the information or opinions contained in any article it. Opinions are those of the author and may change without notice. Readers should exercise their own judgment when relying on information contained in the articles or FAQs. To the maximum extent permitted by law, no member of Zagga accepts liability for any loss arising from the use of such information.

Media coverage featured reflects the independent opinions of the authors and does not necessarily represent the official views of Zagga.

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