More than one in four properties in Australia purchased with cash in 2023 – latest research reveals
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Key takeaways
Over a quarter (28.5%) of residential properties in Australia’s major eastern states (Victoria, New South Wales, and Queensland) were purchased entirely with cash in 2023, amounting to $129.6 billion.
Cash purchases are dominated by two groups—regional buyers and inner-city urban buyers.
Regional purchases are likely driven by retirees and downsizers seeking lifestyle changes, while urban purchases involve affluent owner-occupiers and investors.
More than one-quarter of all residential properties purchased across Australia’s three largest states were funded entirely with cash in 2023, with buyers immune to recent interest rate hikes, according to a new report released by PEXA.
PEXA’s 2023 Cash Purchases Report found the total value of cash-funded residential sale settlements (that is, properties purchased without a mortgage attached) increased by 1.5% in 2023 across the nation’s eastern states of Victoria, New South Wales and Queensland, totalling $129.6B.
This was up from $127.7B in 2022, with cash funding now accounting for 28.5% of all residential property sales in 2023 (up from 25.6% in 2022).
Julie Toth, Chief Economist at PEXA, said:
“Cash buyers are changing the dynamics of the residential property market and exerting a greater influence on overall property demand.
The relatively large size of this group helps to explain the property market’s resilience in 2023, despite rapid rises in interest rates.
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.
This could be exacerbating the existing intergenerational wealth divide when it comes to housing affordability.
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.
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.”
NSW recorded the highest aggregate value of cash purchases in 2023 at $54.9B, accounting for 27.7% of total residential purchases.
QLD followed, with cash purchases valued at $39.4B (29.6% of total residential purchases), and Victoria at $35.3B (25.2% of total residential purchases).
PEXA’s report also found that the growing cash-buyer market is dominated by two groups:
- regional buyers – who contributed to the largest proportion of residential cash-buyers; and
- inner city-urban buyers – who made up the largest share of cash purchases by value and volume, due to greater transaction volumes and higher-priced properties in inner city locations.
Ms Toth said:
“Regional cash property purchases are likely being driven by retirees and downsizers looking for a ‘tree change’ or ‘sea change’ which has become a popular trend in recent years.
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.
In Melbourne’s postcode 3000 for example, over half of all purchases were paid in cash in 2023″
Regional areas across Queensland saw the highest proportions of cash purchases in 2023, with a total of 33,055 residential properties purchased without a mortgage in these locations. Properties were also more affordable in these regional areas.
While the eastern state postcodes with the highest aggregate value of cash purchases in 2023 were mostly in urban centres.
These popular residential postcodes commanded higher prices, with postcode 4217 (Surfers Paradise) topping the eastern states and the aggregate value of cash purchases hitting $1.43B in 2023.
Top performing postcodes in each state
- In NSW, postcode 2765 (Marsden Park) recorded the highest aggregate value of cash purchases in 2023, with $971.9M of properties purchased without a mortgage. Postcode 2422 (Gloucester) recorded the highest percentage of residential properties purchased with cash (63.9%).
- In QLD, postcode 4217 (Surfers Paradise) recorded the highest aggregate value of cash purchases in 2023, with over $1.4 billion of properties purchased without a mortgage. Postcode 4421 (Tara) recorded the highest percentage of residential properties purchased with cash (86.0%).
- In VIC, Melbourne’s postcode 3000 recorded the highest aggregate value of cash purchases in 2023, with just over $1.3B properties purchased without a mortgage. Postcode 3880 (Paynesville) recorded the highest percentage of residential properties purchased with cash (58.0%).
While these sort of suburb reports are interesting, as I always say, when it comes to property investment, the focus should be on investment-grade properties in A-grade locations.
Never follow a trend or buy in hotspots or growth areas because these won’t give you the long-term growth that you’re looking for.
I’m talking about areas and properties which hold their value over the long term, rather than benefit from an uptick in demand.
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