The suburbs where Australians are paying in cash without mortgages

Over a quarter of new homes sold in Qld, Victoria and NSW last year were bought by a group of Australians who are ‘immune’ to rising interest rates.

Over a quarter of new homes sold in Queensland, Victoria and NSW in 2022 were bought in cash by older Australians who are “basically immune” to the effects of rising interest rates.

The research, published by property insights group Property Exchange Australia (PEXA), found an eye-watering $122.5 billion worth of residential property last year was paid in cash.

Queensland total value of cash purchases by top 20 suburb. Picture: PEXA

That accounts for 25.6 per cent, or 135,544 properties, meaning the Reserve Bank of Australia’s rate hikes will not impact a significant portion of the population.

On Tuesday, Australia’s central bank delivered another blow to borrowers across the country, hiking up interest rates for the 12th time this year, as it tries to drive down high inflation.

The research crystallizes a growing “generational divide” in the housing market that is making it tough for Gen Z Australians to become homeowners as they are disproportionately impacted by interest rate rises.

Broadbeach on the Gold Coast topped the list of cash purchases in 2022 with $1.33 billion in sales, followed by the blue chip metropolitan Melbourne area of Toorak ($893 million) and the affluent Sydney harbourside suburb of Mosman ($725 million).

A home in Melbourne’s inner-eastern suburb of Toorak.

Intergenerational divide

PEXA’s head of research Mike Gill told news.com.au the research found “cash buyers tended to be older and more likely to be buying in regional locations”.

Victoria total value of cash purchases by top 20 suburb. Picture: PEXA

“There is an intergenerational gap,” Mr Gill said. “The reality is there are one quarter of buyers who are not very sensitive to interest rate movements. They don’t have home loans.”

Broadbeach on the Gold Coast topped the list in 2022 for cash sales.

Mr Gill said interest rate increases by the RBA to fight inflation and slow the economy ensures 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”.

“A lot of younger borrowers with those big loans are having to pull back on discretionary items, like going out to dinner, streaming services, all those sorts of things,” he said.

“Even their mortgage repayments are increasing dramatically. That’s not something that a cash buyer is going to be too worried about.”

NSW total value of cash purchases by top 20 suburb. Picture: PEXA

Regional Australia dominates cash purchases

Regional Australia dominated the numbers for overall cash transactions, reflecting the trend of downsizing retirees selling properties in urban areas and making a tree-change or sea-change move.

In Queensland nearly two-thirds (65.2 per cent) of all cash sales were in regional areas, while in NSW, the equivalent figure was 56.3 per cent.

The figure was lower in Victoria, where it was 36.8 per cent.

The top three postcodes for cash purchases in Queensland were Tara 4421 (78.4 per cent), Russell Island 4181 (76.4 per cent) and Gin Gin 4671 (71.9 per cent).

In New South Wales, Emmaville 2371 (73.3 per cent), Gloucester 2422 (65.2 per cent) and Woombah 2469 (62.5 per cent) led the way, while Yarram 3971 (57.5 per cent), Paynesville 3880 (57.1 per cent) and Metung 3904 (56.9 per cent) ranked highest in Victoria.

Mr Gill said purchasing properties in cash was not new, and had been happening at a similar rate in recent years.

“Can we say for certain that this is a phenomenon that’s just occurring now with these higher interest rates we’re seeing? Probably not,” he said.

“Going back to 2019, the proportion of overall purchases with cash has remained pretty steady at 25 per cent, which would suggest that this is not something that’s dramatically increased.

“The fact that property prices have gone up so much, this is impacting the amount of money that cash buyers are having to spend, so that’s happening all the time.”

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