GRAVITY CAPITAL

Private Credit in Australia: Where the Market Stands in October 2026

By Gravity Capital, Australian private credit lender to property developers in Sydney, Melbourne, Brisbane and Dubai. Published . Last updated .

In short: In October 2026, Australian private credit is under stress. Sydney developer Bathla Group collapsed owing about $3.4 billion, and several funds, including Centuria Bass, CVS Lane and Metrics, have frozen redemptions. The RBA lifted the cash rate to 4.60%, home values have fallen six months straight, and lenders are pulling back from high-leverage development deals.

Key takeaways

What is private credit?

Private credit is lending by non-bank lenders and investment funds instead of banks.

In Australia it's heavily weighted to property. ASIC estimates real estate lending makes up between 40% and 60%, "or potentially more", of the sector, including construction loans, first and second mortgages, mezzanine finance and bridging loans.

Australian private credit market data at a glance (October 2026)

Indicator Latest reading As at Source
RBA cash rate 4.60% (up 0.25 points) 30 Sep 2026 RBA
National home values −1.1% in month; −5.2% from Mar 2026 peak Sep 2026 Cotality
Sydney home values −1.4% in month; −8.6% from Feb peak; −7.0% over 12 months Sep 2026 Cotality
Melbourne home values −0.7% in month; −6.2% over 12 months Sep 2026 Cotality
Brisbane home values −1.5% in month Sep 2026 Cotality
Construction insolvencies, FY2025–26 3,472 companies (24.5% of all) Data to 27 Sep 2026 ASIC data via Cyberate
Construction insolvencies, 1–27 Sep 270 in 2026 vs 225 in 2025 (provisional) Data to 27 Sep 2026 ASIC data via Cyberate
Bathla Group known debts About $3.4bn (about $3.08bn secured) 24 Sep 2026 ABC
Australian private debt AUM A$234bn 2025 EY-Parthenon via Bloomberg

What is the state of the Australian private credit market in October 2026?

It's under stress. Australian private credit is large and concentrated in property, and it's now facing gated funds, tighter bank funding and an ASIC crackdown at the same time.

Two months ago, private credit was a growth story. Now it's a stress test.

Private debt assets under management in Australia reached A$234 billion in 2025, according to EY-Parthenon data cited by Bloomberg.

On 22 September, ASIC Commissioner Simone Constant said the regulator is "now well beyond warnings" and the sector "should prepare for enforcement action", with multiple investigations underway.

Funding for the funds themselves is tightening too. Bloomberg reported on 16 October that global banks including Goldman Sachs and UBS are becoming more selective with fund-level financing, steering away from smaller managers and those heavily exposed to Australian real estate.

Morningstar expects private credit fund growth to slow substantially, the ABC reported.

Which private credit funds have frozen redemptions, and why?

Centuria Bass, CVS Lane and Metrics Credit Partners have suspended redemptions in some funds, and MA Financial has capped them. As reported, the causes are redemption pressure linked to Bathla, valuation questions, and a mismatch between regular liquidity and multi-year property loans.

One Metrics listed trust's expected 30 June net tangible assets were revised to A$1.93 a unit, down from A$2.15. Constant has also said that offering regular redemptions on illiquid, multi-year property loans "creates a fragile product design that breaks down under pressure."

What happened to Bathla Group?

Sydney developer Bathla Group entered voluntary administration on 25 August 2026 owing about $3.4 billion. Construction has stopped and lenders are enforcing project by project. As at 18 October 2026, creditors aren't required to meet to decide the group's future until 13 September 2027.

Teneo was appointed voluntary administrator of the Bathla Group of companies on 25 August, according to the administrators' creditor portal. The group owed about $3.4 billion, about $3.08 billion of it claimed by secured lenders, the ABC reported. ASIC says the money came from around 40-plus lenders through around 540 SPVs that it knows of so far.

Since then:

Morningstar's Winky Tan told the ABC that first-mortgage lenders are in a much stronger position, while mezzanine lenders risk losing most, if not all, of their investment.

Are construction and developer insolvencies rising in Australia?

Yes, in recent months. Business insolvencies hit a record in August 2026, driven by Bathla, and September is running above last year. Over FY2025–26 as a whole, construction insolvencies were slightly lower than the year before but still made up about a quarter of all company failures.

Business insolvencies hit a record high in August, up 66%, the AFR reported, and Bathla overwhelmingly drove the jump in construction.

Strip Bathla out and the level is still elevated. On ASIC data analysed by Cyberate, 3,472 construction companies entered external administration in FY2025–26. That's 24.5% of all company insolvencies and slightly below the previous year's count, but court liquidations rose 23% and receiver appointments rose 73%.

The new financial year is running hotter. In ASIC's provisional figures for 1 to 27 September, 270 construction companies entered insolvency, compared with 225 over the same days last year.

More receivers means more secured lenders enforcing.

What does the 9 Kenneth Street, Tamarama mortgagee sale show?

It shows peak-cycle prices resetting. The oceanfront Sydney property sold at a mortgagee-in-possession auction on 26 September 2026 for $20.25 million, which is $8.95 million (about 30%) below its 2022 price of $29.2 million.

The property, five dated apartments and a beach shack on the Bondi-to-Bronte walk, sold for $20.25 million, the SMH reported. The reserve was $24 million and was adjusted on the day so the property would sell. Two mortgages were listed on the title, according to the SMH.

Illustration: how a 60% loan becomes a shortfall

Hypothetical only. The figures below are assumptions. They do not reflect the actual debt, lender or loan terms on this property, none of which has been publicly reported.

Assume a $29.2 million peak purchase, a 60% loan at 10% and a five-year hold. Nothing is serviced: fees and interest are capitalised and land tax goes unpaid. Then it sells for $20.25 million.

What has to be paid out of the sale (rounded):

That's before counting the owner's own losses. Stamp duty of about $2.0m on a $29.2m NSW residential purchase in 2022 comes out of the buyer's equity, not the loan. Add the 40% deposit and, on these assumptions, roughly $13.7m of the owner's money would be gone before the lender lost a dollar.

The lesson: buy at peak prices, hold for years and pay double-digit rates, and even 60% leverage can end up underwater. That's why lenders are now pricing exit risk, not just LVR.

What is the RBA cash rate, and will rates rise again?

The cash rate is 4.60%. The RBA raised it by 25 basis points on 29 September 2026 and said it could go higher "if needed". The next decision is due on 3 November 2026.

The September increase is the fourth of 2026, up from 3.60% at the start of the year, according to the RBA's cash rate table.

The decision was unanimous. The Board said it will do what's necessary, "including increasing the cash rate target further if needed." The next decision is scheduled for 3 November.

Most private development debt is floating-rate, so every hike hits interest reserves straight away.

Are property prices falling in Sydney, Melbourne and Brisbane?

Yes. Cotality's national index fell 1.1% in September 2026, the sixth monthly fall in a row, leaving values 5.2% below the March 2026 peak. Sydney is 8.6% below its February peak.

PropTrack shows a milder fall, with national prices 3.3% below peak, The Broker Times reported. It points the same way.

Slower sales mean longer holds and more interest, and that's where feasibilities break.

Is appetite for high-leverage development finance falling?

Yes. Higher rates, softer values and gated funds have made lenders pull back from stretched deals, especially thin-equity mezzanine and land-bank loans. Well-structured deals are still getting funded.

Add banks pulling back from fund finance and a regulator focused on valuations, and capital is getting choosier.

Metrics suspended new lending, The Nightly reported. Eldium's Larry Diamond has pointed to "tighter availability of funding for land and development".

Stretched mezzanine on thin equity is getting harder to place. So are land-bank loans with no clear path to construction.

Deals with experienced sponsors, sound feasibility and a credible exit are still getting done.

Is Gravity Capital still lending?

Yes. Gravity Capital, an Australian private credit lender to property developers, is busy and capital is still flowing to well-structured deals.

We're busy. Money is still flowing.

Gravity Capital lends from $5 million to $100 million, with capital sourced from family offices and institutional partners.

A lot of the market is putting out fires right now. We take no pleasure in that. An orderly market is good for every lender and every developer.

Our job is simple. We assess the deal on its merits, move quickly when the numbers work, and say no early when they don't.

Leverage is earned through track record, feasibility and a credible exit. That's how we've always lent.

Indicative terms within 48 hours. No committees. No delays.

Got a deal the bank said no to?

If you have a construction, bridging, mezzanine or structured deal from $5 million to $100 million, including Australia–Dubai cross-border transactions, send us a one-page summary. You'll talk directly to the people who make the decision.

Submit a deal

Brokers: referral fees are paid on settled transactions.

Frequently asked questions about Australian private credit

What is happening in Australian private credit in October 2026?

Australian private credit is under stress. Sydney developer Bathla Group collapsed in August 2026 owing about $3.4 billion, several funds have frozen or capped redemptions, and ASIC says the sector should prepare for enforcement action. The RBA lifted the cash rate to 4.60% on 29 September, and Cotality data shows home values have fallen for six straight months.

Why are private credit funds freezing redemptions?

Many private credit funds offer regular redemptions while holding illiquid, multi-year property loans. When redemption requests spike or valuations are in question, managers can suspend withdrawals so they aren't forced to sell assets. ASIC Commissioner Simone Constant has called this liquidity mismatch a "fragile product design that breaks down under pressure". In 2026, concerns about Bathla exposure and audit delays at some funds preceded freezes.

Which Australian private credit funds have frozen or limited redemptions?

As reported by the ABC and Alternative Credit Investor: Centuria Bass paused redemptions in two credit funds on 14 August 2026, CVS Lane suspended withdrawals from some funds in August, MA Financial capped monthly redemptions from its flagship real estate credit fund, and Metrics Credit Partners suspended redemptions in some unlisted funds from 30 September. MA Financial and Metrics say they have no Bathla exposure.

What happened to Bathla Group, and when is the creditors' meeting?

Bathla Group, a Sydney property developer, entered voluntary administration on 25 August 2026, with Teneo appointed as administrators. It owed about $3.4 billion, including about $3.08 billion claimed by secured lenders, and construction has stopped. As at 18 October 2026, the NSW Supreme Court has extended the deadline for the second creditors' meeting to 13 September 2027, the ABC reported.

What is the RBA cash rate in October 2026?

The RBA cash rate is 4.60%. The Reserve Bank raised it by 25 basis points on 29 September 2026, effective 30 September. That was its fourth increase of 2026, after the rate started the year at 3.60%. The decision was unanimous, and the Board said it would raise rates further if needed. The next monetary policy decision is due on 3 November 2026.

Are property prices falling in Australia's capital cities?

Yes. Cotality's Home Value Index fell 1.1% nationally in September 2026, the sixth monthly decline in a row, leaving values 5.2% below the March 2026 peak. In September, Sydney fell 1.4% and is now 8.6% below its February peak, Melbourne fell 0.7% and Brisbane fell 1.5%. PropTrack shows a milder national fall of 3.3% from peak.

Can developers still get private construction finance in Australia?

Yes, but lenders are more selective. Gated funds, tighter bank funding for private credit managers and falling property values have reduced appetite for highly leveraged or speculative deals. Experienced developers with sound feasibility, sensible leverage and a credible exit are still being funded. Gravity Capital, for example, provides indicative terms within 48 hours on deals from $5 million to $100 million.

How is private credit regulated in Australia?

ASIC oversees private credit funds, though it says there are limits to its remit, especially for wholesale funds. ASIC has published 10 principles for "private credit done well". On 22 September 2026, it said the sector is "now well beyond warnings" and should prepare for enforcement action. It has multiple investigations underway and is actively surveilling wholesale and retail funds.

Sources

Important information: This article is general information and market commentary only. It is not financial product advice, credit advice, an offer or a recommendation, and it doesn't take into account your objectives, financial situation or needs. It draws on the third-party sources linked and is current as at 18 October 2026. Gravity Capital provides commercial finance to companies for business and investment purposes only. It does not provide consumer credit or financial product advice. All lending is subject to credit assessment, eligibility criteria, satisfactory security and internal approval. Past performance is not indicative of future results.