Despite a sharp fall in bitcoin prices over the past eight months, some bullish investors are still willing to accept the cryptocurrency instead of Australian dollars for the sale of their multimillion-dollar homes.
One bitcoin is currently trading at $US6448, down from its peak in December 2017 of $19,535.70.
Now with one bitcoin worth $A8786, a prime piece of real estate in Sydney’s inner-city has hit the market with the option to buy in the cryptocurrency.
It is a risky move given a property deal is yet to be struck in Australia using bitcoin, despite several properties being offered for sale last year with vendors willing to accept payment in that form.
The latest offering is an impressive four-bedroom house at 201 Albion Street in Surry Hills, which currently operates as both an art gallery and residence. It is being marketed with a price guide of around $5 million – or in today’s value about 570 bitcoins.
“It is unusual for a vendor to accept bitcoin as payment but we are positive there will be buyers who are attracted to this form of payment,” selling agent Joshua Charles, of One Commercial, said.
“The site would work extremely well for tech start-ups, advertising agencies, medical services firms … the property really is amazingly flexible.”
The property owner, Peter Maddison, is a big believer in cryptocurrencies and has invested in bitcoin, bitcoin cash and Etherium. He isn’t concerned about bitcoin’s current market value.
“Yes it fluctuates, but I think it’s stabilising. I see bitcoin as just another form of currency,” he said.
“Some people have bitcoins that they may have either made or purchased for $300, which would make it a very cheap house for them,” he said.
Mr Maddison said a potential buyer could bid at auction in Australian dollars and then convert the money in bitcoin for the deposit and then convert the rest on the day of settlement.
No bites so far
In September 2017, Paul Hosking was one of the first home owners in Australia ready to accept bitcoin in exchange for his six-bedroom Mount Macedon house in Victoria priced at $2.5 million, in fiat currency terms.
“It didn’t sell, and we mostly got people wanting to talk about bitcoin to me rather than genuine enquiries,” Mr Hosking said.
“It was at a time when the market was at its peak. Bitcoin was just about to hit $US20,000 which was about $A30,000. I would have done extremely well.”
Owner of Harcourts Boronia, John Garnett, a selling agent who marketed a property late last year with the lure of bitcoin payment, believes the complexities of transacting with bitcoin and a small buyer pool means purchasing property in a cryptocurrency is unlikely to take off any time soon.
“There would only be a tiny segment of the market willing to transact in that way. Also deposit money can’t be paid in bitcoin because it has to be held in an agent’s trust account, which is heavily regulated.”
As well as sellers potentially having to pay extra capital gains tax if the bitcoin payment grew in value after settlement, another point of contention could be choosing a time to lock down the conversion rate.
“Is it the point of sale, or settlement or even during the negotiation period? When you’ve got something from a 30 to a 120-day settlement a lot can happen, especially when bitcoin can fluctuate so much even in a day,” Mr Garnett said.
While Queensland-based real estate agent Cheyenne Morrison didn’t receive any serious bitcoin offers for the 32-hectare rural property south of Cairns he was selling last year for 100 bitcoins (or $1.1 million), he’s steadfast in his belief that buying homes with cryptocurrency is the future.
“Despite the drop, when the market settles down and it becomes more socially acceptable, properties will be sold for bitcoin – it’s just another form of money transfer,” Mr Morrison said.
“There was a huge amount of publicity and its died down but the underlying technology is revolutionary.”