Cash sales surge in Australia’s property market, PEXA reveals

In a transformative shift for Australia’s residential property landscape, over a quarter of properties in the nation’s three largest states were purchased solely with cash in 2023, according to PEXA’s latest research. This finding, underscored by the 2023 Cash Purchases Report from PEXA, signifies an emerging trend amidst escalating interest rates, suggesting that a segment of buyers remains unaffected by the financial tightening.

The report detailed an increase of 1.5% in cash-funded residential sale settlements across Victoria, New South Wales, and Queensland, accumulating to $129.6 billion, up from $127.7 billion in 2022. This aligns with the revelation that 28.5% of all residential property sales in 2023 were cash purchases, a notable rise from 25.6% the previous year.

Julie Toth, Chief Economist at PEXA, emphasized the impact of cash buyers on the property market, stating, “Cash-buyers are changing the dynamics of the residential property market and exerting a greater influence on overall property demand.” She highlighted how the prominence of this group has buoyed the market’s resilience despite the swift rise in interest rates.

Toth also addressed how the boom in cash purchases might be influencing housing affordability, pointing out that “This could be exacerbating the existing intergenerational wealth divide when it comes to housing affordability.” The demographic of cash buyers often consists of older individuals or retirees, who, despite lower household incomes, could be considered ‘asset-rich,’ possessing substantial property, savings, and superannuation resources.

The findings indicate New South Wales leading in cash purchases with a total of $54.9 billion, followed by Queensland and Victoria. The report sheds light on two dominant profiles within the cash-buyer market: regional purchasers and inner-city urban buyers, each with distinct motives and patterns.

PEXA’s research also uncovers trends within specific postcodes, with areas such as Melbourne’s postcode 3000 witnessing over half of all purchases made with cash in 2023. Similarly, other postcodes across the eastern states have shown significant cash purchase volumes, highlighting varied preferences among cash buyers for urban centers versus regional locales.

Given the insights from PEXA’s 2023 Cash Purchases Report, which covers residential property transactions from January 2020 to December 2023, the buying dynamics within Australia’s property market appear to be shifting significantly. This movement is particularly pronounced among cash buyers, who now represent a substantial and influential segment of the market.