Downsizers, treechangers and seachangers splash cash for regional properties in FY24

Welcome to the PEXA Cash Purchases Report for FY24. This report explores residential property transactions that were funded entirely with cash during FY24. That is, residential properties that were purchased without a home loan directly attached to the purchase. 

This report focuses on residential property purchases in Australia’s three largest states, New South Wales, Victoria and Queensland. The data come from settlements conducted on the PEXA digital property exchange, which handles around 90% of all property transactions across Australia, including 95% of transactions in NSW and 97% in VIC. Property settlements have been analysed for all postcodes that had at least 80 cash purchases during financial year 2024. 

There are a range of situations that would be classified as a cash purchase in our report. For example, an existing homeowner drawing down equity or selling their current home to fund a new property purchase. For more detail on these types of transactions, see the end of the report.

Key findings

• Across NSW, VIC and QLD in FY24:
  • There were 140,572 cash purchases, which accounted for 26.5% of all residential purchases.
  • $138.0 billion was spent, in total, on cash purchases. This accounts for 28.0% of the aggregate value spent on residential property.
  • The volume and aggregate value of cash purchases is higher compared to FY23, but this largely reflects a stronger property market in FY24.  
• Residential settlements with a loan have risen in recent quarters, particularly in Victoria. This suggests that first home buyers, who are much more likely to take out a mortgage, have grown as a share of recent homebuyers. This has decreased the share of cash purchases over the recent quarters.
• Postcodes with the highest aggregate value of cash purchases in FY24:
  • Were likely to be located in affluent inner-city suburbs of Sydney and Melbourne, as well as along on the coast in Queensland, particularly south-east Queensland.
• Postcodes with a high proportion of cash purchases in FY24:
  • Were more likely to have an older demographic, consisting of retirees, ‘treechangers’ or ‘seachangers’, looking to purchase regional properties.
  • Were likely to have a high proportion of purchases that would be considered risky investments and would have difficulty obtaining funding from lenders, such as student accommodation, holiday homes and vacant lots.
  • Were located in areas which had experienced recent flooding or are at high risk of future flooding. Homebuyers in these areas may have been potentially unable to secure a mortgage for these properties, due to the financial institutions’ perceived level of environmental risk.  

There has been much interest in the rising proportions of home buyers – and especially first home buyers – who receive financial support from family, also known as the ‘bank of mum and dad’. Research by the Productivity Commission (2021) and Australian Housing and Urban Research Institute (AHURI, 2023) confirm that the incidence of family assistance has grown, but in the vast majority of cases, a mortgage is still required.

Volume of cash purchases, FY24

Cash purchases have been historically highest in QLD

• A total of 140,575 properties were bought with cash in FY24 in the eastern states, up 3.9 per cent from FY23.
• QLD typically recorded the highest volume of cash purchases compared to NSW and VIC, due to strong demand from interstate buyers looking to retire in QLD. The RBA estimates that since the COVID-19 pandemic, QLD has received more than 150,000 interstate migrants. 

NSW

• Many of the postcodes have experienced catastrophic floods in recent years. The Northern Rivers Region including 2372 (Tenterfield) and 2480 (Lismore) was particularly hard hit in February 2022, whereas 2731 (Moama) suffered when the Murray River flooded in October 2022. A Federal Inquiry into insurers’ responses to 2022 major flood claims recommended that governments co-operate with financial institutions to restrict lending for housing developments on land at a 1-in-100 year flood risk or more.
• The dwelling turnover rate in postcode 2731 (Moama) in FY24 is particularly high, around 15.5%. Only including properties bought with cash would result in a cash turnover rate of 8.4%. In the neighbouring cross-border town of Echuca, in postcode 3564 (Echuca), there was also a relatively high proportion of cash purchases (32.4%), but a much lower dwelling turnover rate (4.5%).  

VIC

• Postcodes 3880 (Paynesville), 3851 (Loch Sport) and 3909 (Lakes Entrance) are all located along the coast in Central Gippsland, and often make an appearance in VIC’s top 10 postcodes for their high share of cash purchases. These coastal suburbs in East Gippsland may record a high number of cash purchases due to lenders unwilling to provide loans to these homebuyers, as a large proportion of properties in these areas are expected to be at high risk of coastal flooding in the future.
• The inner-city postcodes of 3000 (Melbourne) and 3053 (Carlton) are associated with very high levels of student accommodation and new high-density dwelling construction. Financial institutions tend to regard student accommodation as high risk, and funding requirements usually require an apartment to meet a minimum standard in terms of total floor size. However, investor demand for these dwellings is likely to remain high, especially given the record-high intake of international students in recent years. Service apartments are another example of properties deemed too high-risk for a mortgage, as they are typically smaller and can only be used as rentals.
• Properties in postcodes 3223 (St Leonards) and 3225 (Point Lonsdale) on the Bellarine Peninsula were the highest price properties on this list, suggesting that these are desirable locations for holiday homes.
• In postcode 3451 (Campbells Creek), 60 per cent of cash purchases were for vacant land. 

QLD

• 72 out of 103 cash purchases in postcode 4421 (Tara) were for vacant land. The median value of the vacant land bought with cash was $77,000, explaining why the overall median value is so low.
• In postcode 4184 (Russell Island), 69 per cent of cash purchases were for vacant land, with a median sale value of $65,000.
• Buyers who only bought empty lots without a dwelling may also have faced difficulties obtaining a mortgage, due to the perceived riskiness of a lot, where a dwelling may never be built. As such, this may have driven up the proportion of cash purchases for vacant lots in QLD, which is particularly high compared to NSW.

Value of cash purchases, FY24

A total of $138.0 billion was spent, in cash, on residential property in FY24 in the eastern states 

• NSW spent the most on cash purchases in FY24, totalling $61.0 billion, which was an increase of 22.7 per cent on the prior year. Not all of this growth can be attributed to higher property prices, as the median value of cash purchases in NSW grew by 12.3 per cent from June 2023 to June 2024.
• In comparison, cash purchases also grew by 6.1 per cent and 9.5 per cent in VIC and QLD respectively, in line with the overall recovery of the Australian property market. 

• Despite the volume and value of cash purchases increasing over the last financial year, its share of the total amount of funds spent on property has declined, suggesting that the pace of cash purchases isn’t keeping pace with properties purchased with a mortgage. An increasing share of first home buyers (who are much more likely to require a mortgage) can explain these recent trends. 

• The median spend for a cash purchase in NSW in FY24 was highest at $805,000, followed by VIC $616,500 and then QLD at $610,000.
• The median value of a cash purchase has grown significantly in NSW and QLD, which were up 7.3 per cent and 11.7 per cent respectively from FY23. However, median price growth in VIC has remained stagnant, similar to the broader Victorian property market, growing marginally by 2.8 per cent. 

Homebuyers spent the most in a combination of expensive, desirable postcodes and emerging, developing postcodes

NSW

• Postcode 2540 (Sanctuary Point) is geographically sandwiched between St Georges Basin and Jervis Bay, making it an ideal location for holiday homes. There may be stricter lending criteria for holiday homes, due to the potential lack of rental income during the offseason.

VIC

• The Melbournian postcodes where cash buyers spent the most on properties are mostly dominated by blue chip suburbs that are well-located, well-serviced and have an abundance of amenities. Postcode 3029 (Tarneit) and 3064 (Craigieburn) are the notable outer-suburb exceptions. 

QLD

• Analysis by .id (informed decisions) showed that NSW lost 31,183 people in the year to March 2024, most of which moved to QLD (who gained 30,930 people over the same period). These interstate migrants are more likely to be drawn to the landscape and weather that the Queensland coastal regions can provide. 

What is a ‘cash purchase’?

A ‘cash purchase’ occurs when the entire value of a property transaction is funded with cash and the purchase does not have a mortgage attached to it. This means the purchase did not require a loan from an Australian financial institution or lender and no mortgage was registered on the property title at the time of settlement. 

Cash purchases are an entirely normal and legitimate segment of Australia’s property market. Some common situations that can lead to a ‘cash purchase’ include downsizers, seachange and treechange buyers. In broad terms, cash purchases can occur in the following situations:   

• Existing owner-occupiers who do not have a mortgage and are moving to another property of a similar or lower value. If these buyers can fund all of their purchase from the sale of their existing home (plus any savings, inheritances or other assets they might sell), then the new purchase will be counted as a ‘cash purchase’. At the 2021 Census, 31% of Australia’s 10.8 million dwellings were occupied by owner-occupiers with no mortgage.
• Existing owner-occupiers who have a mortgage but are downsizing to another property of a lower value and do not require a mortgage for their new purchase. That is, the new home costs the same or less than the equity they hold in their existing home. They might also be drawing from their savings, inheritances or other assets to fund their new purchase. At the 2021 Census, 35% of Australia’s 10.8 million dwellings were occupied by owner-occupiers with a mortgage.
• Property investors who already own properties or assets that can be used as collateral for a loan to buy a property, or have other sources of finance (e.g. purchases made through a trust, self-managed super fund or other personal investment vehicles). These buyers do not require a mortgage to be attached to the new property in order to complete the purchase. At the 2021 Census, 30% of Australia’s 10.8 million dwellings were occupied by renters and owned by an investor. 
• International property investors who raise the funds for their purchase offshore. International investors comprise a relatively small part of the market. The Foreign Investment Review Board (FIRB) recorded 4,015 foreign purchaser transactions across NSW, VIC and QLD in FY23, totalling $4.1 billion worth of property. Of these purchases, 66% were new dwellings and vacant land and 78.2% were properties valued under $1 million.
• Homeowners purchasing a second home or holiday home without a mortgage. They might hold enough equity in their own home to fund the purchase, or it might be purchased from savings, inheritances, gifts or through personal investment vehicles (e.g. family trusts and similar).
• In a small number of cases, characteristics of the property itself may require it to be purchased with cash and not a mortgage. For example, some properties can be harder to get a mortgage due to very small property size, remote location or significant natural risk factors. 

For further enquiries about this report or other property and mortgage insights, please contact us at research@pexa.com.au. 

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