Cash buyers, a group rich with assets and no need for mortgages, snapped up more than one in four properties across Australia's three largest states in 2023.
A report released today by PEXA, a property analytics firm, said the large-sized group of cash buyers seemed "immune to recent interest rate hikes" and their financial flex helped explain the property market's resilience last year, when interest rates ramped up.
But PEXA's chief economist Julie Toth cautioned the cash buyers, often flush empty nesters and international investors, "could be exacerbating the existing intergenerational wealth divide" when it comes to housing affordability.
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The report found more than one-quarter of all residential properties in New South Wales, Victoria and Queensland were funded entirely with cash last year, totalling $129.6 billion in sales.
That figure was up from $127.7 billion in 2022.
NSW recorded the highest aggregate value of cash purchases at $54.9 billion, followed by Queensland with $39.4 billion and Victoria with $35.3 billion.
"Cash buyers are changing the dynamics of the residential property market and exerting a greater influence on overall property demand," Toth said.
Rapid rises in interest rates last year hadn't affected the ability of these buyers to purchase property to the same extent as those who required a mortgage, she said.
Cash buyers tended to be older and more likely to be retired, the report found.
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While they generally had lower household incomes than people needing a mortgage, they had fewer dependents and were 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," Toth said.
The report found that the growing cash-buyer market is dominated by two groups: Regional buyers and inner city-urban buyers.
The regional buyers contributed to the largest proportion of residential cash buyers; while inner city-urban buyers made up the largest share of cash purchases by value and volume, due to greater sales volumes and higher-priced properties in the city.
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Toth said regional cash property purchases are likely being driven by retirees and downsizers looking for a "tree change or sea change", a popular trend in recent years.
Inner-urban cash buyers are likely a combination of affluent owner-occupiers who are relocating, plus domestic and international investors buying rental properties, she said.
