PEXA: A quarter of Geelong homes selling for cash, see the hotspots

Over a quarter of Geelong property purchases are done without needing a mortgage. See the suburbs where cash is king and who is buying.

Almost 40 per cent of homes purchased in central Geelong in 2023 were done so without a loan.

More than a quarter of home purchases across Geelong in 2023 were paid for with cash.

In Point Lonsdale’s postcode 3225, 51.3 per cent of homes bought without a mortgage was the highest percentage in the region, while Armstrong Creek had 443 purchases without a loan.

More than 2000 homes sold in cash-only transactions in the region last year, representing more than 26 per cent of sales, worth more than $1B.

Across Victoria, about $35.3bn worth of home purchases were made without getting a bank involved and 28.5 per cent of all home purchases were made outright across the eastern states, according to digital property exchange platform PEXA which covers 89 per cent of property sales.

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PEXA chief economist Julie Toth said growing cash-buyer demographic tend to be older and are more likely to be retired.

“They tend to have lower household incomes, but they also have fewer dependants and are more likely to be ‘asset-rich’, with accumulated property, savings and superannuation to fund their next purchase,” she said.

Ms Toth said sea-change and tree-change buyers were the key cash-buyer group not only on the Bellarine Peninsula, but also in central Geelong, where almost 40 per cent of homes (174) were paid for in cash in 2023.

More than half the residential property purchases in Point Lonsdale in 2023 were cash-only.

“In those inner city areas, you have a mix of property types and it includes established homes but also a lot of new apartments, and I think Geelong’s been a part of that story,” Ms Toth said.

“There has been a lot of development down on the waterfront, new properties, so some of those would be getting purchased by people downsizing to an apartment in retirement, but others are investments.”

Postcodes with the biggest proportion of cash buyers included St Leonards (48 per cent), Clifton Springs (37 per cent) and Leopold (30 per cent).

“The Bellarine is showing the same pattern that we’re seeing in parts of Queensland and for example, over in Gippsland where very high proportions of the purchases are that older, moving-from-elsewhere cohort,” Ms Toth said.

The data reveals the rising purchasing power of cash buyers and a growing wealth divide between generations when it comes to housing affordability.

“Where the older buyers are more active, it’s definitely a factor in explaining why property markets have been so resilient even when we’ve got interest rate rises and inflation.”

People who were downsizing usually sell a larger property to fund their next purchase, but Ms Toth said other older people had built up a lifetime of assets, and could draw on savings, superannuation or other investments.

Ms Toth said the report showed a decline in first-home buyers who were able to get into the market.

High numbers in suburbs known for new estates, such as Armstrong Creek and Lara, could partly reflect land purchases, she said.

Homebuyers are purchasing land outright in suburbs with new development such as Armstrong Creek and taking out a mortgage when they can afford to build. Picture: Alan Barber

“Because it can be quite difficult to get a loan on vacant land, they’ll buy the land upfront.

“And then when they can afford it, they’ll take out a mortgage to build on it.”

McGrath, Geelong director Jim Cross said there had been myriad cash-buyers in the Geelong market, including in the past six months purchasing luxury apartments in the CBD.

He said some were downsizing from larger homes in Newtown, Highton or on the peninsula, but there were also business people who had worked hard to create wealth and choosing now to purchase a luxury home.

At the same time, homebuyers who were borrowing as much as 95 per cent of their purchase price were having their borrowing capacity cut back by rising interest rates.

RT Edgar Bellarine agent Felix Hakins said cash was a powerful tool for buyers to wield especially in popular coastal property markets.

143 Point Lonsdale Rd, Point Lonsdale, has sold for close to its $6.4m to $6.8m price guide. More than half the residential property purchases in Point Lonsdale in 2023 were cash-only.

Mr Hakins said sellers had just accepted a cash offer on a four-bedroom waterfront home at 143 Point Lonsdale Rd, Point Lonsdale, which was close to the price guide from $6.4m to $6.8m.

“We’ve transacted that with a 30-day cash settlement,” he said.

“It’s been pretty powerful some of the offers that we are receiving that are cash actually.

“In today’s market cash is very powerful and quick settlements are very powerful as well, they’re a good combination.”

Originally published as PEXA: A quarter of Geelong homes selling for cash, see the hotspots