The top Australian suburbs on the east coast where buyers are paying for property in cash

Almost three in 10 homes purchased on the East Coast last year were bought with cash, contributing to the historically unusual situation of growing home values alongside rising interest rates. The demographics of cash buyers include high income earners buying in blue-ribbon city suburbs, downsizers in all locations, retirees purchasing in seachange and treechange areas and local and overseas investors buying inner city apartments.

Digital property exchange platform PEXA has released its 2023 Cash Purchases Report covering residential property settlements across New South Wales, Victoria and Queensland. The proportion of cash-funded purchases increased by 1.5 percent in 2023 and totalled$129.6 billion. In 2022, cash sales totalled $127.7 billion. Cash buys accounted for 28.5percent of all residential settlements last year, up from 25.6 percent in 2022.

NSW recorded the highest total value of cash purchases at $54.9 billion and 27.7 percent of purchases. QLD cash purchases totalled $39.4 billion and 29.6 percent of purchases, and Victoria cash buys were worth $35.3 billion and represented 25.2 percent.

PEXA’s chief economist Julie Toth said: “Cash-buyers are changing the dynamics of the residential property market and exerting a greater influence on overall property demand. The relatively large size of this group helps to explain the property market’s resilience in 2023, despite rapid rises in interest rates.

“Our research found the demographic profile of cash buyers is different to mortgage buyers – cash buyers tend to be older and more likely to be retired. They tend to have lower household incomes, but they also have fewer dependents and are more likely to be ‘asset-rich’, with accumulated property, savings and superannuation to fund their next purchase. If they have interest-earning savings, then they may even have benefited from rising interest rates,” she said.

The report found regional buyers form the largest cohort of the growing cash-buyer market, followed by inner city buyers. “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.

The largest proportion of cash purchases across the East Coast was in regional Queensland, with 33,055 homes bought without a loan. Renowned retirement destinations such as Surfers Paradise, Broadbeach, Hope Island and Port Douglas were among the most popular locations with cash buyers.

“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,” Ms Toth said. Melbourne and Sydney are among the postcodes with the highest total value of cash buys, likely reflecting a large proportion of local and overseas investors buying apartments.

Top 10 postcodes by proportion of cash buys

QLD 4421 Tara 86% (median price $82,500)

QLD 4184 Russell Island 76% (median price $85,000)

QLD 4671 Gin Gin 72.3% (median price $275,000)

QLD 4819 Magnetic Island 68.2% (median price $365,001)

QLD 4877 Port Douglas 66.4% (median price $445,000)

QLD 4615 Nanango 65.0% (median price $292,500)

NSW 2422 Gloucester 63.9% (median price $530,000)

QLD 4852 Mission Beach 60.9% (median price $307,500)

QLD 4850 Ingham 60.7% (median price $188,500)

QLD 4660 Childers 59.6% (median price $385,000)

The $11.3 billion Homes for Australia plan unveiled in this week’s Federal Budget includes an additional $1 billion in funding – on top of $500 million previously pledged – to help the states and territories fast-track the building of ‘enabling infrastructure’ such as new roads, sewers and energy, water and community infrastructure to create more areas for buyers to build their new homes.

Treasurer Dr Jim Chalmers handed down his third budget this week (Photo by Martin Ollman/Getty Images)

To support this goal, the Federal Government has also committed $90.6 million to grow Australia’s construction workforce, including 20,000 new fee-free places at TAFE and VET vocational colleges, as well as more skilled migrant visas. CoreLogic research director Eliza Owen commented: “This could add to labour supply to the tune of 22,000 workers, representing 1.7 percent growth in an industry where employment had an average quarterly increase of 0.7 percent over the past decade.”

More construction workers are desperately needed not only to help the Federal Government reach its target of 1.2 million new homes within five years, but also to offset the impact of construction company insolvencies. Ray White economist Nerida Conisbee points out that construction insolvencies continue to rise, with the latest ASIC figures showing 2,758 construction companies entered external administration over the 12 months to 31 March 2024.

Ray White economist Nerida Conisbee says insolvencies remain high in the building industry

Prime Minister Anthony Albanese said the budget encouraged the states and territories to “kick start building”. He commented: “This Budget means more tradies, fewer barriers to construction, less talk and more homes. This isn’t about one suburb or one city or one state. It’s a challenge facing Australians everywhere and it needs action from every level of government.”

The Federal Government is also seeking to reduce demand in the private rental market following a 43.5 percent surge in the national median rent from $437 per week in August 2020 to $627 per week today, according to CoreLogic. The budget provides money for more social housing, plus a plan to make universities build more student accommodation, thereby removing some demand in the private rental market from low-income workers and domestic and international students.

Budget measures include an additional $423.1 million for the National Agreement on Social Housing and Homelessness, taking total funding to $9.3 billion over five years, under which more social housing will be built and existing housing repaired. REA senior economist Paul Ryan said: “All up, the government expects to support the building of 55,000 new social and affordable homes by 2029 – representing a 12 percent increase in the total number of available homes across the country.”

The plan to legislate new requirements for universities to build more accommodation follows a huge surge in immigration, with an almost 550,000 net increase in migrants over the 12 months to 30 September 2023, the bulk of which were international students and temporary workers.

Commonwealth Rent Assistance is being increased for the second year by 10 percent this time, following a 15 percent increase in last year’s budget. The two boosts represent about a $35 per week increase in assistance to almost one million Australians. The Budget also includes $1 billion for crisis and transitional accommodation for domestic violence victims and youth in distress.

AMP chief economist Dr Shane Oliver said the budget’s housing measures were unlikely enough to meet the goal of building 1.2 million new homes over five years. Dr Oliver said the supply shortfall was set to remain “unless immigration plunges”. Treasurer Jim Chalmers says net overseas migration next year is expected to be half what it was this year.

Dr Oliver said the budget’s housing measures were also unlikely to alter the outlook for home prices. He expects modest growth this year. Median dwelling values have already risen 2.2 percent between January 1 and April 30, following an 8.1 percent lift in 2023.

The top Australian suburbs on the east coast where buyers are paying for property in cash

Cash buyers are changing the residential property buying landscape as three in 10 homes sell without a mortgage in 2023

Top 10 postcodes by value of cash buys

Top 10 postcodes by proportion of cash buys

The Albanese Government is initiating a range of measures to tackle the housing crisis, but experts fear it’s not enough