One in four properties purchased without a mortgage

Cash buyers have been active on the East Coast, with a new report showing 25 per cent of all property purchases in 2022 were made without a mortgage.

PEXA’s Cash Purchases Report found that the total value of residential sales that were settled with cash was $122.5 billion out of 478.6 billion in 2022.

The report found that lower-priced regional locations dominated the list of cash-only purchases across New South Wales, Queensland and Victoria, as older buyers and downsizers chose to purchase property in regional areas.

The top three Queensland postcodes with the highest cash purchases by percentage were Tara (78.4 per cent), Russell Island (76.4 per cent) and Gin Gin (71.9 per cent).

In NSW, Emmaville (73.3 per cent), Gloucester (65.2 per cent) and Woombah (62.5 per cent) led the way, while Yarram (57.5 per cent), Paynesville (57.1 per cent) and Metung (56.9 per cent) ranked highest in Victoria.

Source: PEXA

The report found cash purchases across the Eastern States were skewed towards regional areas, with 65.2 per cent of cash purchases in Queensland being in regional areas, 56.3 per cent in NSW and 36.8 per cent in Victoria.

The locations all shared other common traits including higher median ages, lower labour force participation and their primary family composition, which according to ABS, was “couple family without children”.

PEXA Head of Research Mike Gill said given these transactions represent more than a quarter of all residential property purchases, it is important to consider that this is a sizeable cohort of buyers who are less impacted by rising interest rates, having not taken out a loan.

“Our research found cash buyers tended to be older and more likely to be buying in regional locations, which does highlight the generational divide between borrowers,” Mr Gill said.

“Younger homeowners are more likely to have larger home loan balances, particularly those who have purchased recently, whilst many older homeowners are likely to have paid their home loan off or be able to pay cash for a home to retire in.

“Therefore, as the RBA raises interest rates to slow the economy and fight inflation, the burden falls more toward younger Australians who are more sensitive to rising rates and less so on older generations who may in fact benefit if they have savings.”

According to the report, the locations that saw the highest value of cash purchases were the blue chip inner city locations of Toorak ($893 million), Broadbeach ($1.33 billion), Surfers Paradise ($1.27 billion) and Mosman ($725 million).

The report also found that the number of properties purchased with cash was highest in Queensland, over 85 per cent of cash purchases in New South Wales were dwellings, while land sales made up over 20 per cent of all cash purchases in Victoria.

Notably in Victoria, Carlton, East Melbourne and Melbourne, all ranked highly for cash purchases which were also urban areas that were popular with young professionals and university students.

Source: PEXA

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.