Aussies hoping to get onto the property ladder this year have been warned to prepare for “fierce competition” from cash-rich buyers who don’t need a mortgage. Cash purchases surged to $138 billion across New South Wales, Victoria and Queensland last financial year, and one property expert doesn’t expect things to slow down this year.
Data from online property settlement platform PEXA found 141,000 homes across the three eastern states were bought with cash last year, up 3.9 per cent from the previous financial year. While the share properties purchased without a mortgage dipped 0.4 per cent to 26.5 per cent, the share of value rose 0.4 per cent to 28 per cent.
Pivot Property Buyers founder Henry Single said cash buyers, who tended to be older, were a “force to be reckoned with in the property market” and posed a significant risk to those who don’t have the backing of the Bank of Mum and Dad.
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“Typically cash buyers tend to be wealthy domestic or international investors, or downsizers with significant equity,” Single said.
“They are generally unfazed by the borrowing constraints first home buyers face and are undeterred by high interest rates.
“Increasingly cash buyers are also wealthy returning expats who have the benefit of buying with a stronger currency and are looking to put down roots in their suburb of choice.”
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PEXA’s report revealed the highest value of cash purchases were happening in affluent inner-city suburbs of Sydney and Melbourne, as well as along the coast in Queensland, particularly the south-east.
Sydney was the most popular among cash buyers by value, with $1.7 billion worth of property bought without a mortgage. This was followed by Surfers Paradise, where $1.6 billion worth of property was snapped up.
NSW spent the most on cash purchases, totalling $61 billion. This was an increase of 22.7 per cent on the previous year, with PEXA noting this growth couldn’t be wholly attributed to rising prices which grew 12.3 per cent.
Postcodes with a high proportion of cash purchases were more likely to have an older demographic, including retirees, tree- and sea-changers, looking to purchase regional properties.
Single said cash buyers had “single-handedly bolstered the property market’s resilience” in the face of high interest rates, with the Reserve Bank of Australia (RBA) holding the cash rate steady at 4.35 per cent all of last year.
