Loading the Elevenlabs Text to Speech AudioNative Player...
Looming $138 billion property threat for first-home buyers in 2025: ‘Outbid and outbuy’
Cash purchases soared 14 per cent to $138 billion across the eastern states last financial year, PEXA data found. · Source: Getty
Aussies hoping to get onto the property ladder this year have been warned to prepare for “fierce competition” from cash-rich buyers who don’t need a mortgage. Cash purchases surged to $138 billion across New South Wales, Victoria and Queensland last financial year, and one property expert doesn’t expect things to slow down this year.
Data from online property settlement platform PEXA found 141,000 homes across the three eastern states were bought with cash last year, up 3.9 per cent from the previous financial year. While the share properties purchased without a mortgage dipped 0.4 per cent to 26.5 per cent, the share of value rose 0.4 per cent to 28 per cent.
Pivot Property Buyers founder Henry Single said cash buyers, who tended to be older, were a “force to be reckoned with in the property market” and posed a significant risk to those who don’t have the backing of the Bank of Mum and Dad.
RELATED
“Typically cash buyers tend to be wealthy domestic or international investors, or downsizers with significant equity,” Single said.
“They are generally unfazed by the borrowing constraints first home buyers face and are undeterred by high interest rates.
“Increasingly cash buyers are also wealthy returning expats who have the benefit of buying with a stronger currency and are looking to put down roots in their suburb of choice.”
Do you have a story to share? Contact tamika.seeto@yahooinc.com
PEXA’s report revealed the highest value of cash purchases were happening in affluent inner-city suburbs of Sydney and Melbourne, as well as along the coast in Queensland, particularly the south-east.
Sydney was the most popular among cash buyers by value, with $1.7 billion worth of property bought without a mortgage. This was followed by Surfers Paradise, where $1.6 billion worth of property was snapped up.
NSW spent the most on cash purchases, totalling $61 billion. This was an increase of 22.7 per cent on the previous year, with PEXA noting this growth couldn’t be wholly attributed to rising prices which grew 12.3 per cent.
Postcodes with a high proportion of cash purchases were more likely to have an older demographic, including retirees, tree- and sea-changers, looking to purchase regional properties.
A total of $138 billion was spend, in cash, on residential property, with NSW leading the pack. · Source: PEXA
Single said cash buyers had “single-handedly bolstered the property market’s resilience” in the face of high interest rates, with the Reserve Bank of Australia (RBA) holding the cash rate steady at 4.35 per cent all of last year.
————-
“In the coming year, this affluent cohort will continue to outbid and outbuy their less moneyed counterparts,” he warned.
Single expects up-and-coming properties in Sydney’s inner city, inner west, North Shore and eastern suburbs will continue to appeal to cash buyers, along with luxurious sea and tree change suburbs.
“In high demand and prestige locations, cash buyers are already driving the market for the most desirable homes,” he said.
“As Sydney property continues its downswing in the brief period before interest rates cuts, cashed up buyers will be uniquely poised to swoop in to snap up distressed listings and prize properties at will.”
It comes as Gen X overtakes Baby Boomers for property wealth, as well as shares.
Gen X, who are aged between 44 and 59, hold the most amount in housing with an average value of $1.31 million. This was closely followed by Baby Boomers at $1.3 million.
In comparison, the KPMG research found Millennials and Gen Z had $750,000 and $69,000 average wealth stored in housing.
KPMG urban economist Terry Rawnsley told Aussies to expect the wealth transfer to continue as Baby Boomers downsize.
“Baby Boomers have historically been the largest holders of housing assets, but as this cohort ages into retirement they are beginning to sell down their property portfolios”, he said.
Baby Boomers still led the way for cash and deposits with $242,000, followed by Gen X with $176,000, Millennials with $104,000 and Gen Z with $26,000.
For average net worth, Baby Boomers were on top at $2.31 million on average, Gen X followed with $1.88 million, Millennials with $757,000 and Gen Z with $96,000.
Get the latest Yahoo Finance news – follow us on Facebook, LinkedIn and Instagram.
Keep Up to Date with the Most Important News
