Homebuyers go mortgage-free: Downsizers and tree-changers spent $138 billion into residential properties in FY24

In a subtle shift in the residential property landscape, PEXA Group’s latest Cash Purchases Report reveals that in FY24, 140,572 ‘cash’ purchases accounted for 26.5 per cent of all residential transactions across Australia’s eastern states of New South Wales, Victoria, and Queensland.  
 
With total expenditures on these cash transactions rising to $138 billion, cash purchases represent 28 per cent of the overall value spent on residential properties – a rise in the volume and aggregate value of cash purchases compared to FY23. 

The highest absolute values of cash purchases were predominantly found in the affluent inner-city suburbs of Sydney and Melbourne, as well as the coastal areas of southeast Queensland, where property values tend to be high. Regional locations that have a high proportion of cash purchases tend to be home to an older demographic and attractive to buyers consisting of retirees, tree-changers, and sea-changers seeking regional lifestyle properties. In capital city suburbs, the locations associated with cash purchases imply a wider and more complex range of buyer situations, such as established home movers and property investors. 
 
PEXA Group Chief Economist, Julie Toth, said that the data also indicates a subtle shift in Australia’s residential property market dynamics during FY24.  

“Despite the increase in both the volume (+3.9%) and value (+14%) of cash purchases in FY24, their share of total property settlements declined over the year, from 26.9% (FY23) to 26.5% (FY24).  

“These declines in the proportion of buyers who can ‘pay cash’ in NSW and QLD seem to correlate with a welcome return of first home buyer activity in these markets. 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.  

“Established buyers and investors are more likely to have access to other sources of finance to fund their purchase, or be able to buy outright. 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.  

Land Insight (PEXA Group subsidiary) Co-founder, Tim Osborne, commented on the implications of ‘cash purchase’ dynamics in selected regional locations, noting that the data show an unusually high proportion of cash purchases in certain postcodes that have been particularly affected by recent flooding or are at high risk of future flooding, such as postcodes 2480 (Lismore) and 2731 (Moama). 

“This could indicate that potential buyers in these regions may struggle to secure insurance and/or mortgages due to financial institutions’ concerns regarding environmental risks. Difficulties securing affordable insurance in these areas can have a cascading impact on potential home buyers, because mortgage providers generally require all mortgaged properties to be insured,” said Mr Osborne.  

The PEXA Cash Purchases Report focusses on residential property purchases in the eastern states of New South Wales, Victoria and Queensland, covering a four-year period from January 2020 to December 2024, using property settlement data collected via the PEXA digital property exchange.

The full Cash Purchases report is available here.