Rich Australians spent $138 billion buying property with cash
Analysis shows that cash purchases over the past financial year made up 28 per cent of a property market fuelled by wealthy downsizers, retirees and investors.
CASH property sales surged 14 per cent to $138 billion as wealthy Australians flexed their financial muscle over the past year, a new report shows.
The analysis by PEXA shows that cash purchases over the past financial year made up 28 per cent of a property market fuelled by wealthy downsizers, retirees and investors.
Affluent inner-city suburbs in Sydney and Melbourne and coastal areas of southeast Queensland were home to the biggest cash purchases, according to PEXA.
Regional locations with a high proportion of cash purchases had an older demographic consisting of retirees, tree-changers, and sea-changers.
“We’re seeing a small number of very high-value properties being purchased without an actual mortgage being raised on those purchases,” PEXA chief economist Julie Toth said.
“At that very top end, people do tend to have a greater range of finance sources they can access so it’s not showing up as a mortgage.
“This segment is less affected by interest rates, and they comprise a large portion of the market, which I expect will continue to rise in line with the ageing population.
“The amount they spend on property – 28 per cent of all transactions – is substantial, which is one of the reasons why the housing market stayed resilient in the past year.”
Sydney took the cash purchase crown as $1.7 billion worth of properties were bought in well-heeled Mosman, Darling Point, Bondi and Randwick without as mortgage. The average cash purchase was $2.7 million in Mosman and $2.5 million in Darling Point.
Despite the increase in cash purchases over the year, they have started to decline over recent months.
“These declines in the proportion of buyers who can ‘pay cash’ in NSW and QLD seem to correlate with a return of first home buyer activity in these markets,” the chief economist said.
“We know that first home buyers are more likely than other buyers to need a mortgage to complete their settlements, even if they receive financial support from government, the ‘bank-of-mum-and-dad’ or other sources.
“This shift back toward first-home buyer activity helps to explain the gradual decline in the share of cash purchases that has been evident in these states in recent quarters.”
