What the Latest Lending Data Is Telling Me and Why Sunshine Coast Investors Shouldn’t Panic
By Leigh Martinuzzi | Martinuzzi Property Group – eXp Australia
I’ll be honest, when I read through Cotality’s latest lending data for the March 2026 quarter, my first reaction wasn’t surprise. It was more like confirmation of what I’ve been observing on the ground for the past few months. The numbers are sobering, but they are not a reason to make rash decisions.
Let me walk you through what I’m seeing, what I think it means, and why I still believe the Sunshine Coast tells a different story to the rest of the country.
My Take on the National Numbers
According to Cotality, total housing loan commitments fell 6.2% in volume and 3.8% in value over the March quarter. That’s a meaningful pullback, and in my view, it’s not a blip. It’s the cumulative weight of stretched affordability, three RBA rate hikes already in 2026 bringing the official cash rate to 4.35%, and a consumer confidence shock triggered by rising energy prices off the back of the Iran conflict. When people feel uncertain, they hesitate, and buying property is one of the biggest decisions most people will ever make. That hesitation is now showing up clearly in the data.
What I find particularly telling is where the pullback is coming from. Owner-occupier lending dropped 6.9% in volume and 4.3% in value. Investor lending, by comparison, fell 5.3% and 3.0% respectively. So investors are pulling back too, just not as fast. The result is that the investor share of total loans has hit a record 41.0% in volume terms, and 40.3% in value, the highest since December 2016 according to Cotality.
I want to be clear about how I read that number: this isn’t a sign of investor strength. It’s a sign that everyday home buyers are stepping back faster. That’s a concerning dynamic, not a positive one.
First Home Buyers: Squeezed at Both Ends
I feel for first home buyers right now. They held up reasonably well in volume terms this quarter, likely thanks in part to the Federal Government’s 5% Deposit Scheme, but their average loan size actually fell by around 2.6%, according to Cotality. That tells me borrowing capacity is being compressed even among those who are still pushing through.
In my experience, first home buyers are the most rate-sensitive group in the market. They’re working with tighter margins, less equity, and less buffer. As the full impact of recent hikes filters through over the coming quarters, I expect this cohort to feel the pressure most acutely. That’s not a reason to stay out of the market forever, but it does mean timing, product selection, and financial preparation matter more than ever right now.
The Reform That Concerns Me Most
I want to spend a moment on the negative gearing changes, because I think they’re being underplayed in the broader conversation. The Federal Budget’s decision to remove negative gearing for purchases of existing residential properties is, in my view, the most consequential policy shift for property investors in a long time. Cotality’s analysis confirms what I’ve been thinking: this will reduce investor lending on a net basis. Some investors will shift toward new builds where negative gearing still applies, but the reality is that most investors have historically preferred existing homes. They know what they’re getting, the numbers are more predictable, and the entry costs are often lower.
With rental yields already sitting below the cost of borrowing in many markets, and rates potentially heading higher still, the cashflow case for holding existing investment properties has genuinely deteriorated. I’m not saying the sky is falling, but I do think investors who haven’t stress-tested their numbers under the new policy settings need to do that urgently.
Why I’m Still Grounded About the Sunshine Coast
Here’s where my perspective shifts. The national data matters, and I’m not dismissing it. But when I look at the Sunshine Coast specifically, I see a market with structural foundations that most of the country simply doesn’t have.
Vacancy rates here are sitting around 1.1%, with some suburbs as low as 0.5%. That’s not a healthy rental market, it’s an undersupplied one, and it has real consequences for investors. Rents on the Sunshine Coast grew nearly 10% through 2025, and gross rental yields for houses are now tracking around 4.1%. That’s a meaningfully better cashflow position than what investors face in Sydney or Melbourne, where yields are paper-thin and holding costs are punishing.
The other factor I keep coming back to is the population story. The Sunshine Coast is still attracting interstate migration, remote workers, and families who want lifestyle without the capital city price tag. That demand doesn’t evaporate because the RBA raised rates. And when you layer in the infrastructure pipeline, the Direct Sunshine Coast Rail Line, the Maroochydore CBD, and the airport expansion, you’re looking at a region that is structurally growing its economic base, not just riding a sentiment wave.
Do I think the negative gearing reform will affect investors here? Yes, to a degree. Investors who bought existing properties on thin margins and relied on the tax offset to make the numbers work will face a harder road. But investors with quality assets, adequate equity, and a long-term mindset are in a far more resilient position, especially in a market with the rental fundamentals the Coast has right now.
What I’d Say to Buyers, Sellers, and Investors Right Now
If you’re a buyer: In my opinion, the window you’re in right now is better than it looks. Days on market are sitting around 31 days, competition has eased compared to the frenzy of prior years, and there’s more room to negotiate. If you’re finance-ready and clear on what you want, I think this is a market worth being active in, particularly for well-located, quality properties that don’t stay available for long.
If you’re a seller: I’d encourage you to be realistic but not pessimistic. The Sunshine Coast’s lifestyle appeal and chronic undersupply remain real. What’s changed is that buyers are more selective. Presentation, pricing, and targeted marketing are doing more of the heavy lifting now than they were 18 months ago. Get those right, and there are still motivated buyers in this market.
If you’re an investor: I think the next 12 months require more caution and more precision than the previous few years did. Run your numbers under current rates, factor in the negative gearing changes, and be honest with yourself about your buffer. If the fundamentals still stack up after that stress test, and for well-selected Sunshine Coast properties, I believe many will, then the long-term case for this region remains strong. If they don’t, it’s better to know now.
Final Outlook
I’m concerned about the national picture. The data from Cotality supports that concern, and I think there’s more turbulence ahead before conditions genuinely ease. The full weight of rate hikes hasn’t landed yet, consumer confidence is fragile, and a significant policy shift is still working its way into the market.
But grounded concern isn’t panic. The Sunshine Coast has real, structural reasons to perform differently: tight supply, strong migration, a rental market that remains deeply undersupplied, and an infrastructure story that will keep reshaping this region for years to come. My job is to help you navigate this with clear information and honest advice, not to sell you a line about the market always going up.
If you want to talk through what any of this means for your specific situation, whether you’re buying, selling, or reviewing your investment position, I’m always happy to have that conversation.
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