One in four Aussie homes were bought with cold hard cash last year

Jarrod
By Jarrod
5 Min Read

One in four Australian properties were purchased with cash in 2023, shining a light on the widening wealth divide in the country’s real estate market. 

Fresh data from settlement platform PEXA revealed that a whopping 28.5 per cent of sales across Victoria, New South Wales, and Queensland were made with cold hard cash at a time when it has never been harder for the average Australian to afford a home. 

According to PEXA, the figures were up almost 3 per cent from 2022, with the purchases mostly coming from aging regional owners, investors and downsizers in the cities.

While soaring interest rates and a cost of living crisis had most Aussies struggling to keep the lights, these cashed-up buyers reportedly spent a whopping $129.6 billion scooping up properties along the East Coast. 

The majority of these deals without a mortgage were struck in NSW, equating to $54.9 billion, or more than 27 per cent of the market. Marsden Park was the number one postcode for volume of cash residential purchases, hitting $971.9 million.

In Queensland, the value was $39.4 billion (more than 29 per cent of all purchases), concentrated mostly in Surfers Paradise to the amount of $1.4 billion. Victoria clocked in at $35.3 billion, which covered 25 per cent of all residential transactions. The greatest amount of those were in the Melbourne CBD.

PEXA’s Chief Economist Julie Toth said the large number of cash buyers would explain the market’s stubborn resilience against the rapid interest rate rises over the last year.  

“Cash-buyers are changing the dynamics of the residential property market and exerting a greater influence on overall property demand,” said Toth.

“While rising interest rates have contributed to cost-of-living impacts across most types of households, the growth of this cash-buyer cohort – at over a quarter of all residential property buyers across the eastern states – suggests the rate rises of the past year have not affected the ability of these buyers to purchase property to the same extent as buyers who require a mortgage.”

NSW also had the highest aggregate value of cash purchases last year, with the median cash-only purchase totalling $770,000. The median value of cash purchases in Victoria and Queensland was $604,500 and $570,000 respectively.

A generational divide

According to Toth, it’s these same older cash-rich Aussies sweeping up property that are causing the existing intergenerational wealth divide in housing affordability to only get wider. 

“Our research found the demographic profile of cash buyers is different to mortgage buyers – cash buyers tend to be older and more likely to be retired,” she said.

“They tend to have lower household incomes, but they also have fewer dependents and are more likely to be ‘asset-rich’, with accumulated property, savings and superannuation to fund their next purchase. If they have interest-earning savings, then they may even have benefited from rising interest rates.”

Coincidentally, the places with the highest proportion of cash purchases last year just so happened to be in areas popular with older Australians who are likely to be retired — and in areas where property prices are more affordable.

In Tara, a town around 300km west of Brisbane, 86 per cent of properties sold last year were paid for in cash, with a median cash purchase value of $82,500.

Russell Island, in Queensland’s Moreton Bay, had 76 per cent of properties purchased paid for in cash last year, with a median cash purchase value of $85,000.

Ms Toth said these regional cash purchases were likely driven by retirees looking for a “tree change or a sea change”.

“In contrast, the inner-urban cash buyers are likely a combination of affluent owner-occupiers who are relocating, plus domestic and international investors buying rental properties,” she added. 

“In Melbourne’s postcode 3000 for example, over half of all purchases were paid in cash in 2023.”

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Jarrod
By Jarrod
Jarrod Brown combines his background in journalism, copywriting and digital marketing with a lifelong passion for storytelling. He has a strong passion for new and emerging consumer technology within the building sector. He lives on the Sunshine Coast - usually found glued to the deck of a surfboard.

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