Cash purchases account for over ¼ of resi purchases

The PEXA Cash Purchases Report for the financial year 2024 has found there were a total of 140,572 cash purchases (up by 3.9 per cent year on year) across NSW, Victoria, and Queensland, accounting for 26.5 per cent (down by 0.4 per cent) of all residential purchases.

This is down from the peak of 30.3 per cent recorded in the June quarter of 2023.

The report defined “cash purchases” as residential properties being purchased without a home loan directly attached to the purchase and funded entirely with cash.

In total, $130 billion was spent on cash purchases, comprising 28 per cent of the aggregate value spent on residential property, showing an increase of 0.4 per cent on FY23, reflecting a stronger property market throughout the financial year.

Additionally, residential settlements with a loan have risen in recent quarters, notably in Victoria, suggesting that first home buyers (who are more likely to take out a mortgage) have grown as a share of recent home buyers, thus lowering the share of cash purchases over the same period of time.

According to the report, Queensland held the highest share of cash purchases over FY24 at 50,740 (28.1 per cent), slightly down on the previous financial year’s figure by 0.8 per cent.

Meanwhile, NSW saw the largest increase in the volume of residential cash purchases, up by 9 per cent to 47,927, with a share of 27 per cent. This was followed by Victoria with an increase of 4.4 per cent to 41,905 and a share of 24.2 per cent.

Queensland typically records the highest volume of cash purchases when compared to the other eastern states due to strong demand from interstate buyers looking to enter retirement in the state.

The Reserve Bank of Australia (RBA) estimated that Queensland has received more than 150,000 interstate migrants since the onset of the COVID-19 pandemic.

Furthermore, there has been particular interest in the rising proportion of home buyers (especially first home buyers) who receive financial support from their families, aka the ‘Bank of Mum and Dad’.

While research conducted by the Productivity Commission (2021) and the Australian Housing and Urban Research Institute (AHURI) (2023) found that cases of family assistance have grown, mortgages were still required in the vast majority of instances.

According to Jarden Australia, home buyers who received a family loan or gift were given an average of $70,000, with larger family gifts being equivalent to 10 per cent of the purchase price and usually covered the deposit.

Mortgage brokers that were surveyed indicated that the majority of first home buyers in 2023 were now using family assistance, up from just 12 per cent in 2010.

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.