A quarter of Victorian homes selling for cash — see the hotspots
Forget the mortgage, tens of thousands of Victorian homes are being bought ‘cash’ - without the banks getting a look in. See the neighbourhoods where cash is king, and find out who is buying.
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More than a quarter of Victorian homebuyers paid cash in 2023, with almost 42,000 dodging a loan despite paying hundreds of thousands or even millions of dollars for properties.
In the Melbourne CBD more than half of all home purchases, a combined total of just over $1.3bn and more than 1600 sales, were bought without a mortgage.
Meanwhile the Gippsland town of Paynesville had the highest percentage of cash purchases with 58 per cent of properties paid for without a loan.
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State wide, about $35.3bn worth of home purchases were made without getting a bank involved.
Around Australia, 28.5 per cent of all home purchases were made outright in 2023, according to digital property exchange platform PEXA which covers 89 per cent of property sales.
It accounted for $129.6bn worth of transactions, and is up from 25.6 per cent of residential sales in 2022.
PEXA chief economist Julie Toth said the size of the cash-buyer demographic in the property market helped to explain the resilience of home prices despite soaring interest rates in the past two years.
Ms Toth said the majority of these buyers were older and likely to be retired and using large nest eggs or long-term gains from the property market to purchase after selling another home.
But given high numbers in suburbs known for new estates, like Truganina, it was also possible the stats reflected land purchases.
“Because it can be quite difficult to get a loan on vacant land, they’ll buy the land upfront,” she said. “And then when they can afford it, they’ll take out a mortgage to build on it.”
“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,” Ms Toth said.
“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.”
Barry Plant Yarra’s Edge branch manager Geoff White said CBD cash sales numbers were likely boosted by those purchasing student accommodation for investments.
And in Craigieburn, the state’s second most prolific suburb for those buying without a mortgage, Ray White’s Trish Orrico said significant numbers were downsizers and singles with a recent home sale behind them.
Prominent Melbourne buyer’s advocate Cate Bakos said there would be a large number of international buyers among those purchasing cash, as many new migrants were arriving as skilled workers having already established a career overseas.
Ms Bakos said downsizers homing in on more convenient homes closer to healthcare and amenities were also likely well represented.
With lending figures showing a reduction in home loan borrowing, a growing share of homes selling to cash buyers could also be down to fewer sales.
“So it’s not entirely surprising,” she said.
Real estate website Juwai IQI co-founder Kashif Ansari said Henley & Partners data showed about 5200 millionaires relocated to Australia in 2023, more than the number moving to the United Arab Emirates or the United States of America.
A new report from his firm released yesterday shows Australia is now the top destination for Singaporeans looking to buy outside of their country, accounting for 27.5 per cent of outbound property searches.
They also spent $300m on Aussie homes in the 2022-2023 financial year, behind only a $400m spend from Vietnam and an estimated $4bn from mainland China and Hong Kong.
Christie and Co Property Group chief executive Michael Christie said international buyers looking in Melbourne’s were conscious prices had risen less than in Sydney recently and offered better value.
Mr Christie said many were “all cash buyers” and others were using overseas banks.
“Most people who immigrate are at least middle class, but your main cash buyers are your ultra-high net worth and high net worth buyers,” he said.
“A lot of them were SIV applicants, and most had their SIV approved just before the
program was cancelled. They are moving as much of their money out of Asia as
possible. It’s about setting up a life here and generating an income.”
Mr Christie said his firm had worked with about 30 cash buyers who looked at everything from CBD apartments to new housing estates.
“We just sold a new penthouse for $4 million to a Thai buyer after the first inspection,” he added.
“They inspected every penthouse in the CBD area and settled on this one. It has
more than 290 square meters of internal space on Collins Street. That buyer is
paying cash.”
RT Edgar Bellarine agent Felix Hakins said cash was a powerful tool for buyers to wield in popular coastal property markets such as the Bellarine Peninsula.
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.”
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