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Why I Believe Property Growth Will Continue If Your Financial Plan Is Right
The Australian property market is once again facing a major regulatory intervention from the Australian Prudential Regulation Authority (APRA). Come February 1, 2026, the new Debt-to-Income (DTI) borrowing cap will be a reality.
As a financial planner, I see clients get nervous every time APRA steps in. Yet, as a property investor myself, I see something different: an affirmation that sound financial planning and discipline will determine who captures the next wave of growth.
My core thesis is that property prices will continue to grow, but this growth will be captured exclusively by those who have structured their personal and property finances correctly.
Understanding APRA’s New Guardrail
APRA's new policy dictates that banks must limit new loans with a high Debt-to-Income (DTI) ratio of 6 times or more to just 20% of their total new lending.
This is a risk management tool, not a market control switch. It’s designed to be a guardrail, a barrier to prevent excessive risk-taking if interest rates were to fall sharply and lenders began competing aggressively on high-leverage loans. It does not stop a stable market; it stops a dangerous one from overheating. Mind you that there are few fine prints here.
1- Its applied to new bank borrowings non bank borrowers are not impacted.
2-It's applied on the overall lending portfolio for the bank.
3-The average loans exceeding 6 times or more in the lending market is less than half of the suggested guardrail.
Source: Apra Quarterly Report- June 2025
The Historical Lesson: Policy Only Works on Weak Fundamentals.
To understand the 2026 prediction, we must glance at history: Apra's Intervention 2014 (Investor Cap) and 2017 (Interest-Only Cap).
The lesson is this: APRAs policy is only as powerful as the surrounding economic and credit conditions allow. In 2026, the conditions supporting growth are simply too strong for this policy, in isolation, to cause a crash. Also, Australia is way far from hitting the ceiling of 6 times of debt to income ration.
The 2026 Outlook: Why the Undersupply Bulldozer Wins
As an investor, I focus on fundamentals, and the number one fundamental today is the extreme structural undersupply of housing. This is the Bulldozer that will continue to push prices up, overriding the Guardrail.
The Scale of the Shortage: Data from groups like the National Housing Supply and Affordability Council highlights a multi-year national deficit of over 262,000 homes. This is a gap that is widening annually due to strong migration and slow construction.
The Prediction: The physical scarcity of homes means that while the DTI cap may cool the rate of growth slightly, it cannot change the trajectory. Expert forecasts, like those from SQM Research predicting 6% to 10% national growth in 2026, reflect the consensus that supply is the dominant factor.
Setting Your Financial Plan Right for Continued Growth
If you agree that growth is likely to continue, your focus should shift away from 'Will prices drop? to 'How do I prepare my finances to capture this growth?' This is where your financial plan becomes your most powerful asset.
1. Optimise Your Debt-to-Income (DTI)
The new policy makes DTI management crucial. Even if your borrowing capacity isnt immediately affected, proactively managing this ratio protects your future options.
Action: Work with your finance professional to identify non-essential debt (e.g., credit card limits, non-asset-backed loans) to reduce your overall debt exposure, creating flexibility for future purchases or portfolio restructuring.
2. Focus on Cash Flow and Holding Power
If the market continues to grow, your biggest risk is not price decline, but being forced to sell because you cant service the loan during a rate cycle.
Action: Build higher liquidity buffers and ensure your plan can service your loans at higher interest rate stress tests than the bank requires. This is the difference between an asset owner and a forced seller.
3. Goal Alignment is Non-Negotiable
As an investor, I always remind myself that property is a long-term wealth-building vehicle, not a short-term trading commodity. The DTI cap will make it harder for speculative investors to enter, which is a good thing for market stability.
Action: Review your property holdings against your 5-, 10-, and 20-year retirement goals. Is the asset truly performing its function? If your plan is sound, enduring the short-term fluctuations becomes easier.
Final Thought
The APRA DTI cap is a necessary piece of banking governance. It will likely slow down a future credit binge, but it will not solve the fundamental housing shortage.
For those of us in the property market, the game is still driven by supply and demand. The continuation of growth is highly probable, but only those who apply financial discipline, manage their DTI, and align their property decisions with a rock-solid financial plan will be positioned to benefit from it.
Disclaimer: I am a Financial Planner, not a property expert, and I am sharing my observations as a property investor. This article is for informational purposes only and does not constitute financial or property investment advice. Always seek tailored professional advice before making decisions
I hope you found this Wealth Byte beneficial. I’m Mo Shouman, a financial adviser with 20 years of experience helping professionals save on tax and grow their wealth. Book your financial clarity meeting below and discover how you can take your finances to the next level. I’m proud to be the only adviser who provides a detailed assessment of your financial position—whether you decide to work with me or not!