Gold Coast property boosted by high level of cash buyers immune to pain from interest rate rises

A new study has uncovered remarkable data that shows where Gold Coast property prices may be headed in the wake of repeated RBA rate rises. Here’s what it says.

A new report shows the Gold Coast leads the nation in terms of cash sales of property, boosting hopes the city will escape the worst effects of rising interest rates.

Cash buyers spent $1.33bn on property in Broadbeach in 2022, with Surfers Paradise not far behind with $1.27bn spent.

According to the figures, compiled by digital property settlement company PEXA, the two Gold Coast hot spots were far ahead of purchases in capital cities funded without a home loan, with Toorak in Melbourne ($893m) and Mosman in Sydney ($725m) next on the list.

Ray White Burleigh Group CEO Tiger Malan said downsizers and interstate migrants were making up a large portion of the cash buyers.

“It’s the downsizer market that’s pretty strong, particularly in Broadbeach,” Mr Malan said.

“... (Downsizers) are selling their houses in the suburbs, their houses on water.

“(They’ve made) an equity gain through Covid and they’re running that equity gain into their apartment and paying cash.

“... The interstate migration is what I think is probably filling up Surfers Paradise and to some degree Broadbeach.

“They’re moving here after trading their Sydney townhouse for $4 million and they think a $2m unit is cheap. So they pay cash.”

Ray White Burleigh Group CEO Tiger Malan.

The PEXA study showed a number of other Gold Coast suburbs near the top of the list for value of cash sales in Queensland, with high volumes also recorded in Hope Island, Biggera Waters, Southport, Burleigh Heads and Palm Beach.

PEXA Head of Research Mike Gill said it showed there was a “significant cohort” of mostly older buyers who would not be affected by the dozen rate rises imposed by the RBA since May last year.

“Given these (cash) 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,” Mr Gill said.

“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. 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.”

Mr Malan said the high proportion of cash buyers on the Gold Coast, combined with a continued shortage of supply to meet the strong demand for apartments, meant property prices in the city may remain strong for some time to come.

“I think we’ll be one of the lucky ones. I think we’ll ride it out best,” Mr Malan said.

“In saying that consumer sentiment always affects prices eventually.”

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