Nell Matzen - 3 Sep, 2021

More Australians using Cryptocurrency to save for a house deposit

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In a time when prospective homebuyers are looking for more and more creative ways to purchase a home, Cryptocurrency is emerging as a potential avenue to break into the property market. There are countless stories of Aussies young and old making substantial amounts of money playing the Crypto market, but like any investment, it’s important to understand what you’re investing in, including the potential risks and rewards.

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What is Cryptocurrency?

Cryptocurrency is about as futuristic a concept as the name suggests. Cryptocurrencies are virtual or digital currencies that can be sent between users without the need for a bank. They are protected by a cryptography, meaning they are almost impossible to counterfeit. They are also based on networks distributed across a large number of computers, so they are decentralised and immune from the control of governments or central authorities.

However, this doesn’t mean they are a guaranteed stable investment and completely free from manipulation – Cryptocurrency is widely considered a risky investment. 

Marvin Coleman from Mortgage Choice in Oakleigh echoed this sentiment, saying Cryptocurrencies are a highly volatile investment. 

In fact, they are so volatile that a single tweet from a celebrity, billionaire or President can see prices surge or plummet. 

For this reason, doing your research is essential before investing in Cryptocurrency. Make sure you take into consideration the current trends in Cryptocurrencies (more coins are moving toward greener mining options), the past performance of a coin, the technology used by a company, whether they have a strong backing and of course, any future plans that may affect the price. 

Ultimately, like every investment, Cryptocurrencies come with an element of risk, so it’s advisable to tread lightly and only commit a small portion of your portfolio to your chosen coin.

Woman Trading Online Using Tablet Computer On Sofa

Where can you purchase Cryptocurrencies?

Cryptocurrencies can be purchased on a number of platforms, all with differing levels of security and outgoing costs. 

Like any trading platform, there are usually trading fees involved. It’s important to choose a cost-effective trading site, especially if you plan on being an active and frequent trader.

Look for a platform with a high number of verified users with good reviews and no past security issues. And remember, not every coin is available on every platform, so it’s essential to do your research before signing up. 

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How are people using Cryptocurrency to purchases homes?

Buyers are selling their Cryptocurrencies to go toward a house deposit, but some sellers are going a step further and accepting Cryptocurrencies instead of cash for their properties. In May 2021, at least two properties were listed on the Queensland market accepting digital coins for payment.

Corporate affairs manager Olivier Bjorksater-Bleyock advised sellers, vendors and buyers to use caution surrounding Cryptocurrency. 

“When it comes to using Cryptocurrencies, such as Bitcoin for real estate, it can become a little tricky because of the high volatility. That means that its price can change daily, in quite extreme circumstances, sometimes in excess of $10,000 per day. So, to actually assign an actual price in Bitcoin, or any other Cryptocurrency to a property can be quite difficult. It means then you’d have to negotiate that price in a very short period of time,” he said. 

Australian banks don’t currently accept Cryptocurrencies as Australian currency, meaning they won’t be considered genuine savings or even part of a buyer’s finances. The only way to use Cryptocurrency to purchase a property is to cash in your coins, but that might not be the case for too much longer. 

Mortgage broker and 40Forty Finance director Will Unkles said that although Cryptocurrencies aren’t mainstream enough to purchase a home through a bank, that might change in the future. 

 “Literally, three or four years ago, it was a similar thing with people buying and renting out via Airbnb. Now banks accept it. The mortgage world does take a while to catch up, but I wouldn’t rule it out altogether,” he said. 

Young man using desktop pc at desk in home office to purchase Cryptocurrency

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What laws are in place for Cryptocurrency purchases?

Due to the fact that Cryptocurrencies aren’t recognised as Australian currency, sales involving Crypto aren’t protected by the usual legalities. 

Finance expert Dr Tracey West said that she had concerns over the legal recognition of properties purchased using Cryptocurrency.

 “Bitcoin is not recognised as legal tender by the Reserve Bank of Australia. It does not meet the key characteristics of money. It is not widely accepted as a means of payment, its price fluctuations mean that it does not store value, and it is not a common way of measuring the value of goods and services.”

“The buyer/seller may have difficulty finding finance and conveyancing companies and insurance that will deal with a transaction in Bitcoin. I don’t think it is a legitimate way to purchase a house,” she said. 

Words by Nell Matzen

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