PEXA: 25% of all homes in 2023 bought fully with cash

29 April 2024

 For many people, securing a home loan and a mortgage are pivotal in purchasing a home. However, a recent report has revealed that over 25% of properties purchased on the East Coast were bought outright in cash in 2023.

The report, published by Property Exchange Australia (PEXA), highlighted that 28% of all properties in New South Wales, Victoria & Queensland were bought fully in outright cash purchases.

This unexpected twist was driven primarily by older buyers using savings and assets to purchase in metropolitan and regional areas. But what exactly sparked this new trend?

Who’s splashing the cash?

In PEXA’s report, the biggest amazement was the number of homebuyers purchasing homes in cash compared to recent years.

Out of the $454.7bn generated in overall property sales across the three states – $129.6bn was made without a mortgage being taken out.

This marked a 1.5% increase compared to 2022 and was just underneath the $130.3bn record set in 2021 as the country emerged out of the pandemic era.  

Driving this trend forward was purchases made by those of an older demographic. Most of the cash purchases were made by retired couples or those who had access to large asset pools – making it easier to part with larger transactions.

Where are the biggest purchases being made?

Given the older buyer rate, it might not come as much surprise that Queensland drove the highest percentage of cash purchases on the East Coast.

In Queensland, 29% of all purchases were made fully using cash – compared to 27% in New South Wales and just over 25% in Victoria.

One surprising twist though was that it was regional towns that drove the higher percentage of sales using cash compared to larger suburban areas. The highest rate was found in the small rural town of Tara, Queensland where over 86% of purchases were made in cash. A staggering feat for a town that is over 300km away from Brisbane and over 100km from Toowoomba.

Unsurprisingly, it was New South Wales though that held the highest average price range in any of the three states. Buyers in NSW spent a median of $770,000 – a huge leap over the averages of Queensland and Victoria – with median prices of $604,500 and $570,000 respectively.

It was also in New South Wales where the highest median average could be found too. This came from the central Sydney suburb of Milsons Point. The area, known for landmarks such as Luna Park, averaged a median price of $2.5m – where just over 52.8% of purchases were made with cash.

It’s a stark comparison to Tara in Queensland. Despite a higher purchase rate, the Western Downs locality had a median price average of $82,500 for a property – only 4% of the median price of Milsons Point.

One surprising trend that also emerged was that cash purchases were typically higher in regional areas compared to their suburban counterparts. Out of the top 30 regions listed in the report, only 3 were suburban areas compared to 27 rural towns.

However, cities did outshine their regional counterparts in both the average value and total volume of sales made. For example, it was Melbourne CBD that had the highest volume of purchases made with 1,697 altogether in 2023. Meanwhile, the glitzy reaches of Surfers Paradise in Queensland boasted the highest aggregate value of purchases sporting an average price of $1.4m.

All this shows that prospective homeowners are still willing to enter the property market but more are pushing on with full purchases if they have the means to do so.

Highlighting NSW’s key regions:

Highest median average – Milsons Point

LGA: North Sydney

Population: 2,529

Median Cash Purchase: $2.5m

Percentage of cash purchases: 52.6%

Few areas have quite the attraction than what Milsons Point does. Situated right on Sydney Harbour’s North Shore, this is a region crammed with highlights such as Luna Park as well as a direct connection to Sydney Harbour Bridge. Proximity to these focal landmarks makes them the perfect place to grab a home right on Sydney’s iconic waterfront. It’s been a huge drive for foreign investors to call the region home. This is driven by huge demand from buyers from the Far East with 7% of residents coming from China and another 4% from Hong Kong. With 4.2% of residents hailing from India, the influx of foreign investors has made this one of the exclusive and priciest areas to purchase property in all of Australia.

Highest rural median value – Bowral

LGA: Wingecarribee Shire

Population: 10,764

Median Cash Purchase: $1.5m

Percentage of Cash Purchases: 51.9%

Nestled in the heart of the Southern Highlands, Bowral finds itself as a sleepy town primed for a peaceful retirement. Not too far from Sydney, Canberra or Wollongong, it’s a town known for stunning views and boutique living. This idyllic lifestyle has made it one of the top destinations for elder Sydneysiders to choose to live out their later years. The 2021 Australian Census revealed that over 50% of the town is over 55 – one of the highest averages in Australia for elderly residents. Moreso, 35.5% is over 64 meaning that many home purchases are likely to come from couples looking to retire. It’s this ability to use lifelong savings and assets that has enabled the town to boast such high figures when it comes to making an outright cash purchase.

Highest percentage of cash purchases – Gloucester

LGA: Mid-Coast

Population: 2,390

Median Cash Purchase: 530,000

Percentage of Cash Purchases: 63.9%

On the surface, Gloucester feels like your average regional town. A town that has its roots tied into dairy farming and is only a stone’s throw from Barrington Tops National Park. But with close links to Newcastle, Sydney and also Taree, it’s a well-connected town that has a reputation for a quiet and peaceful lifestyle. It’s made it a popular retirement spot to settle in with the 2016 Census highlighting that over 30.3% of the population is over 65 and the town’s average age sits at 50 years old. This older demographic has driven full cash purchases within Gloucester whose population is estimated to top 4,000 within the next five years.

Summing up

This trend in older buyers using cash assets to purchase homes has given the entire property market a shot in the arm. Despite this increase, over 70% of homeowners still get mortgages when purchasing a home. Freezing of interest rates and changed economic conditions look set to drive this trend forward come 2025.

To seek out the best options for purchasing a home, speak to a Wise Buy Home Lender for guidance today. Our team of home loan and property experts can give you all the advice you need to work out the best way to get on the property ladder today. It’s why choosing Wise Buy gives you the means to buy a home whether it’s fully with cash or with the perfect mortgage for your needs.