Nearly three in 10 properties were bought with cash in 2023, PEXA data reveals

The surprisingly high share of cash home purchases last year provided a $130bn debt-free injection into real estate.

Suburbs with the highest share of property buyers paying with cash were in regional areas popular with downsizers and retirees.

Nearly three in 10 homes on Australia’s east coast were bought with cash last year, a $130bn debt-free injection that has helped underpin property prices despite the rising cost of debt.

PEXA’s latest annual report shows a rising share of residential properties across NSW, Queensland and Victoria are being snapped up without need for a mortgage, lifting from 25 per cent in 2021, to 28.5 per cent last year.

PEXA chief economist Julie Toth said “while rising interest rates have contributed to cost-of-living impacts across most types of households, the growth of this cash-buyer cohort – at over a quarter of all residential property buyers across the eastern states – suggests the rate rises of the past year have not affected the ability of these buyers to purchase property to the same extent as buyers who require a mortgage”.

“This could be exacerbating the existing intergenerational wealth divide when it comes to housing affordability,” Ms Toth said.

The analysis by the online property settlement covers NSW, Queensland and Victoria, the postcodes with the highest shares of cash purchases – as high as 86 per cent in Tara, Queensland – were regional areas popular with retirees and downsizers.

In terms of highest total values of cash purchases, wealthy suburbs dominated, including 223 purchases in Sydney’s Mosman worth on average $2.9m.

NSW recorded the highest ­aggregate value of cash purchases in 2023 at $54.9bn, accounting for 27.7 per cent of total residential purchases, followed by Queensland, with cash purchases totalling $39.4bn (29.6 per cent) and Victoria at $35.3bn (25.2 per cent).

The research revealed “a very large pool of buyers across the largest states didn’t need to take out a new mortgage to buy a home. The single biggest group are the retirees and downsizers – the sea-changers and tree-changers. You can see that in the postcodes they are buying in,” Ms Toth said.

But topping the list in NSW for sheer scale of cash buys was in Marsden Park – a new area in the northwest of Sydney popular with young migrants. The ­average cash purchase there was $675,000, with a total value of $972m.

Ms Toth said a relatively high share of purchases were made with cash in the central city postcode of Melbourne, where half of all deals were debt-free for a total of $1.3bn.

About three in four residences in the Melbourne CBD were rented and the average purchase value of debt-free property sales was $603,500.

“That would be a mix of local and international investors, who are able to fund their activities without a mortgage,” Ms Toth said.

The richest suburbs of the NSW and Victorian capitals also reported among the highest total values of transactions made with only cash. In Mosman, the 223 cash purchases totalled $944m – with a median value of $2.9m. In Melbourne’s Toorak, there were 159 cash purchases with a median value of $2.3m, totalling $641m, the PEXA data showed.

In Queensland, the suburb with the highest value of cash transactions was Surfers Paradise, where 1232 properties were bought debt-free, at a median value of $800,000.