The Real Estate Institute of Australia (REIA) has released a new report to highlight the use cases of blockchain in property transactions and “support blockchain adoption by Australia’s real estate agents and agencies”.
The Blockchain: Opportunities and Disruptions for Real Estate report – a co-collaboration between the REIA and Real Estate Institute of New Zealand (REINZ) and the RMIT Blockchain Innovation Hub – unveils how distributed ledger technology could revolutionise the home-buying process.
It does this by providing a “single source of truth”; a secure, decentralised, transparent and efficient method of transaction for two parties that cannot be changed once a contract is signed.
Calling blockchain “a new economic infrastructure”, REIA president Hayden Groves said he sees the technology as “likely to change the shape of societies and economies and the way we do business with one another”.
The report also highlighted how blockchain can be used in mortgages, whether it is to enable a streamlined securitisation process with “lower cost, faster transaction procession, and great security and transparency from loan origination to maturity” or by enabling new markets to evolve where lenders can secure loans against collateralised assets such as cryptocurrency.
“The difference is that the barriers to access these loans are substantially lowered,” the report stated about crypto-backed mortgages, flagging use cases in the US.
“In addition, repayments on these loans are often much lower than traditional markets.”
Mr Groves has acknowledged that external pressures – such as rising interest rates, a decrease in housing affordability and limited supply – require the property market “to respond to these challenges with faster, more trusted and more customer centric experiences”.
He argues fully integrated Web3 technology holds the potential to open “exactly these opportunities for Australian real estate practitioners”.
At present, blockchain technologies are still in their early phases of adoption by real estate agencies, but Mr Groves indicated that the REIA and REIs “would be working together to enhance opportunities for practitioner awareness”, landmarked by the release of the new report and the minting of a commemorative NFT.
“We have everything from a CPD accredited blockchain course being run by REIWA, through to agents in Sydney being the first in the world to accept payment for property in cryptocurrency as well as emerging smart contract technology for sales and rent rolls,” he commented.
To this end, the president highlighted RMIT’s identification of “a range of key existing, shelf ready opportunities to further this offering”.
Those capabilities include asset management, tokenised fractional ownership, loan and mortgage securisation and payments and real-time accounting.
As well as looking at ready-to-go options, Mr Groves said the collaboration also took the chance to re-image real estate’s not-too-distant future, where “opportunities on offer may include extended reality virtual shop fronts, investor diversification into metaverse property and decentralized lending, borrowing and insurance.”
RMIT Blockchain Innovation Hub’s co-director, distinguished Professor Jason Potts, said that the hub had jumped at the opportunity to work with both the REIA and REINZ, stating that the industry “has the appetite and incentive to really utilise blockchain technology to enhance the customer experience.
He believes “the time is right for Australia and New Zealand to become early adopters and in doing so provide more options for their customers such as the tokenization of real estate assets which can lead to lower costs, increased liquidity and therefore faster settlement times”.
For Mr Groves, “the research is only as good as its adoption”, flagging that the REIA team has been tasked with getting an adoption strategy off the ground.
He iterated: “As REIA President, I want agents and agencies to be a trusted member of their communities and property transactions and blockchain offers the potential to completely improve and grow trust in a real way.”
[Related: APRA to outline crypto expectations to banks]