[Podcast] Believe it or not – more than one in four properties were purchased with cash in 2023 with Julie Toth

Today, we're diving into a topic that's making waves in the property market.

I’m joined by Julie Toth, Chief Economist at PEXA, to discuss the findings of their 2023 Cash Purchases Report, which sheds light on a startling trend: over a quarter of residential properties in Australia's eastern states were bought with cash in 2023.

These cash buyers were immune to interest-rate heights and in a market typically swayed by mortgage rates and lending criteria, so together with Julie, we'll explore the implications of this trend, the profile of these cash buyers, and what it all means for the future of the Australian property landscape.

From potential impacts on housing affordability to the ripple effects on the broader economy, we're set to uncover some truly eye-opening insights.

Australia's Cash Buyer Boom: Insights from PEXA's Chief Economist

In today’s chat with PEXA's Chief Economist Julie Toth, you’ll learn about the rise of cash buyers in residential real estate based on the 2023 cash purchase report findings.

The episode delves into demographic trends, investment strategies, and the impact of these trends on the market as a whole.

• Key findings in PEXA’s report
  • Significant increase in cash purchases in Australia's eastern states, defying the challenges of rising interest rates
  • The total proportion of residential purchases across three states jumped from 25% in 2020 to 2022, up to 28.5% in 2023
    • This jump was particularly pronounced in Queensland.
  • Older, possibly retired individuals are a key demographic of cash buyers, contributing to market resilience
  • The areas that saw a lot of cash purchases are areas known more for holiday and vacation homes or downsizing than for first-home buyers or upgrading.
  • The connection between rising interest rates and more cash purchases
  • Substantial homeowner equity suggests financial stability in the Australian housing market
  • The criteria that overseas investors have that differ from Australian buyers
  • How the trend of cash purchases affects housing affordability for younger generations
  • Cash purchases and alternative financing, like the 'Bank of Mum and Dad,' influence market dynamics and affordability
  • How cash purchases in Australia compare with other countries
  • It’s still too early to say whether the increase in cash purchases is a trend
  • Strategic advice for buyers and investors to consider longevity and value in property selection
  • Trends that are affecting property affordability
    • Home size and expectations.
    • Household density

Links and Resources:

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Details of Pexa’s 2023 Cash Purchases Report are here.

Some of our favorite quotes from the show:

“We know that there are many overseas investors, and we particularly talk about them from China, who are investing for different criteria than Australians are.” — Michael Yardney

“I started investing in the 1970s, but I do clearly remember that if we look at newspaper archives it shows that affordability, whether it's rental or housing, has been an ongoing issue. On the other hand, it's interesting how many first home buyers are still getting in the market over the last decade.” —Michael Yardney

“The problem is, if you look for evil, you'll find it. That's why it's so easy to be a pessimist.”— Michael Yardney

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