The latest update from one of Australia's largest developers shows that slowdown is now well under way. This article explains what the data shows and what it means for developers, residual stock holders and the brokers who fund them.
What Mirvac reported
Mirvac's first-quarter update for the 2027 financial year recorded 429 net deposits and lots exchanged, down 17% on the previous quarter. Sales activity moderated particularly in NSW and Victoria, demand softened in Queensland, and WA remained resilient. Across Mirvac's portfolio, sales leads fell 30% on the previous quarter.
The 429 sales compare with 619 in the same quarter a year earlier, a fall of about 31%.
Source: Mirvac 1Q27 Operational Update, 22 October 2026.
Mirvac attributed the slowdown to the effect of interest rate rises and tax changes on consumer sentiment.
It's important to read this in context. Mirvac said the slowdown was in line with its expectations, and its settlement defaults of 1.1% remain below its long-term average. It also has about $1.4 billion of presales on hand. This is a large, well-capitalised developer managing a softer market, not a business in distress. But if sales and enquiries are slowing for an established developer with strong projects, smaller developers are likely to feel it more.
A two-speed property market
The same update shows a sharp contrast with commercial property. Mirvac's investment portfolio remained 97% occupied, and its wholesale office fund invested about $600 million in two new Premium-grade CBD office assets in Sydney and Melbourne.
For lenders and borrowers, the lesson is that property risk now depends heavily on the type of asset. A well-leased commercial asset, a development site and a block of unsold apartments can all carry very different risks, even at the same LVR.
Why slower presales matter for development finance
1. Funding thresholds are harder to reach
Many construction lenders need a level of presales before they'll fund construction. Fewer sales and enquiries mean it takes longer to reach that level, which delays construction starts and adds holding costs.
2. Feasibility studies age quickly
A feasibility study built on last year's sales rates and prices may no longer hold. House prices fell 4.7% in the September quarter, the steepest quarterly fall on record. See House prices have fallen in every capital.
3. Finance capacity is tighter
The development industry estimates that financing capacity for new projects and buyers' spending power have both fallen by about 10%. The RBA has noted that caution among private credit investors could reduce the supply of new finance for real estate construction. See Projects are being shelved.
What it means for residual stock
Residual stock is completed dwellings that remain unsold after a project finishes. When sales slow, more developers end up holding residual stock, and many refinance it while they sell down the remaining dwellings.
Lenders assessing residual stock facilities typically focus on:
- Realistic sell-down time: how long it will take to sell several similar dwellings at once in the current market.
- Achievable prices: current comparable sales, not original list prices or the project's earlier sales.
- Interest costs over time: capitalised interest grows with every month of a slower sell-down, which reduces the developer's equity.
- Release prices: the minimum net proceeds from each sale that go towards repaying the loan.
- A fallback: whether units can be leased if sales stall, and whether rents can cover holding costs.
An illustrative example: a developer refinances five completed apartments valued at $6 million with a $4 million loan, an LVR of 66.7%. If values fall 10% to $5.4 million, the same loan is at 74.1%, before any capitalised interest or selling costs are added. Small falls in value can change a comfortable position quickly.
The example is illustrative only and does not represent any lender's criteria.
Practical steps for developers
- Refresh your feasibility study at current prices and sales rates. Assume buyer enquiries will be lower and campaigns longer.
- Plan for slower presales. Allow extra time and holding costs before construction funding becomes available.
- Know your residual stock options early. Before completion, understand what a residual stock facility could look like, including likely LVRs, release prices and terms.
- Keep a leasing option in mind. In a tight rental market, leasing unsold stock may be a better option than discounting sales.
- Avoid relying on a single exit. Projects with a credible Plan B are easier to fund.
See also Lessons from Bathla: in development finance, the exit strategy is the loan.
For brokers
- Stress-test developer submissions against current sales rates, not historical ones.
- Ask how many presales are conditional and how firm they are.
- For residual stock, prepare evidence of current comparable sales and a realistic sell-down plan.
The Funding Door view
Slower presales don't make development unfundable, but they do make realistic assumptions essential. Projects with current pricing, sufficient equity and a credible plan for unsold stock remain fundable. Projects that depend on last year's market are much harder to fund.
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Submit Your Scenario →Funding Door Pty Ltd (ACN 638 679 964) provides finance for business and investment purposes only. This lending is not regulated credit, and consumer protections under the National Credit Code do not apply. Funding Door does not provide loans for owner-occupied residential purposes. This article is general in nature, does not constitute financial, credit, tax or legal advice, and does not take into account your individual objectives, financial situation or needs. Worked examples are illustrative only and do not represent Funding Door's lending criteria. References to third parties are based on publicly available information at the date of publication. All lending is subject to credit assessment, valuation, due diligence and formal approval.