A year ago, the sale of the first new homes in exchange for cryptocurrency was reported in the UK press as a gamechanger, and yet little has changed over the last 12 months, writes Chris Dietz, Executive Vice President of Global Operations for Real Estate Companies of the World.
This had the potential as a key moment for the house building industry, with much debate amongst property professionals as to whether this history making sale would irrevocably change the nature of the new homes market.
However, as we draw to the end of 2018, cryptocurrency home sales remain few and far between, and there is little expectation in the industry that this will change in the immediate future. Indeed, in a recent survey of our European members, many of whom have dedicated new homes teams, only a handful stated their belief that cryptocurrency will be a widely accepted method of payment by 2025 and few shared plans to develop as specialists in cryptocurrency.
The most significant advantage of cryptocurrency payments for housebuilders is the speed of the transaction. Buyers purchase a property without deposit or mortgage, which cuts out many of the ‘middle-men’ traditionally involved in homes sales. However, with Bitcoin, the most dominant cryptocurrency, at all all-time low, its relevance as a means for buyers to purchase a property outright is questionable.
Whilst cryptocurrency as a means of payment for properties is currently hindered by its volatility, that’s certainly not to say this will not change. We are still in the youth of digital currencies, and there are undoubtedly those who have succeeded from early investment.
Moreover, we very much support our members in staying up to date with Blockchain ledger technology, an integral aspect of Cryptocurrency transactions, which we see gaining more traction globally.
In Dubai for example, The Dubai Land Department – the emirate’s property legislator – has recently unveiled plans for REST, or Real Estate Self Transaction, a digitalised platform based on Blockchain ledger technology. The system will enable a complete digitalisation of real estate transactions by 2020, eliminating paper documents and reducing brokerage procedures.
This falls within the government’s Dubai 10X plans, which aim to place Dubai ten years ahead of the rest of the world in all sectors, including real estate. Whilst Blockchain technology is not unique to Dubai, the promotion of a Blockchain initiative by a governmental organisation rather than a business within the private sector is an innovative step.
This example shows that cryptocurrency and the legislative framework in which it operates should be taken seriously by house builders. Strutt & Parker, a UK member of Leading Real Estate Companies of the World, noted in a recent research report, New Horizons: Housing Futures, that whilst there are hurdles to overcome with Blockchain, specifically, issues relating to rules around binding digital signatures, the innovation nonetheless has the potential to significantly reduce time and costs involved with sale transactions. The report concludes that it would be unwise for any real estate professionals to believe that the housing industry in the UK will remain as it has been for the past 30 years.