The Australian real estate sector may soon be transformed as cryptocurrency is gaining momentum as a viable way to buy and sell property.
While not currently recognised by the government as an official Australian currency, cryptocurrency (often shorted to crypto) has been widely adopted by investors with Finder’s Consumer Sentiment Tracker survey revealing one in six currently own some form of crypto.
As a result of a hot market, the price of popular coins Bitcoin and Ethereum reached their highest value in history, with one Bitcoin peaking at $87,599 in October and Ethereum at $6,605 in early December.
With these digital assets worth more than ever, some Australian companies are implementing new business practices to turn these assets that many see as speculative into real-world investment vehicles.
Melbourne-based First Place Building Company accepts Bitcoin cryptocurrency as a payment method for the initial five percent online deposit made when customers purchase their house and land package.
General Manager Daniel Senia believes that crypto is a great investment tool despite the volatile price fluctuations.
“I’d say it’s low risk even though it’s highly volatile because you can go in there with as little as 50 or 100 dollars to start your currency accounts,” Mr Senia said.
Lloyd’s Auction House is also embracing cryptocurrency with some properties for sale via auction on their website accepting payment in Bitcoin.
Lee Hames, chief operating officer at Lloyds, believes that there has been a rise in the number of Australians wanting to use cryptocurrencies as a property payment method.
“The use of cryptocurrency as a payment method is becoming more commonly used for purchases as confidence surrounding cryptocurrency gets stronger,” he said.
How cryptocurrency and blockchain technology can help make property buying more accessible
“Smart contracts” using blockchain is another possibility that has cryptocurrency lovers excited as it could lead the way for easier ways to invest in real estate without having to purchase an entire property.
“Blockchain is the next evolution of the internet,” said CEO of Australian blockchain development company Labrys.
“It’s an open infrastructure network where you can build applications that could be useful to the property and mortgage broking industry, but also just generally.”
“One of the things that has been focused on to date is tokenisation of real estate assets. In the blockchain space, you can tokenise anything, which means creating a digital representation of a digital asset.”
“You could purchase a property and put it in a trust and then issue tokens against it on a blockchain system. If you issue thousands of tokens, you could break down the investment to a few dollars per person, which would allow many people to get exposure to real estate assets.”
Major banks starting to come on board with cryptocurrency
Although no major bank has begun to accept cryptocurrency holdings to purchase property as part of a home buyer’s overall finances or allow them to be used as a traditional deposit, some are starting to dip their toes into the decentralised finance space.
In November, Commonwealth Bank became the first Australian bank to offer cryptocurrency services to its customers, with the ability to buy, sell and hold crypto coins being made available in their mobile app.
In a statement announcing the new services, Commonwealth Bank CEO Matt Comyn said that increased consumer demand led to the bank designing a crypto exchange and custody service.
“The emergence and growing demand for digital currencies from customers creates both challenges and opportunities for the financial services sector, which has seen a significant number of new players and business models innovating in this area,” he said.
“We believe we can play an important role in crypto to address what’s clearly a growing customer need and provide capability, security and confidence in a crypto trading platform.”
Words by Rimas Veselis
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- CBA to offer crypto services to customers
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