Measured in bitcoin, SA house prices have fallen off a cliff
It’s a fun exercise to do every year or so: measuring the cost of South African housing in rands versus bitcoin (BTC).
The graph below tells the story. We assume a starting price in rands of R1 million in 2017 and inflate by the average increase in house prices annually. House prices are up just under a third in rand terms over the last six years, so our R1 million house purchased in 2017 is now worth R1.33 million.
Read: Limpopo and Mpumalanga lead residential price increases in SA
The same house would have cost roughly 65 BTC in 2017 and is now worth just 2.4 BTC.
Depending on how you look at it, this is a bad investment if you’re paying in BTC. In other words, you overpaid in BTC if buying in 2017. In rand terms, you’re just about keeping pace with inflation.
Source: Statistics SA, Moneyweb
The results are skewed by the huge bitcoin bull market between 2017 and 2018 when prices went up nearly seven-fold. This was followed by a bear market extending into 2019 when SA housing became substantially more expensive in BTC terms.
Though the above graph shows that house prices in bitcoin have risen over the last two years, this comes after extraordinary bull market runs in 2017 and again in 2021.
The current BTC price of about $29 000 is less than half its November 2021 peak of around $65 000.
Over the longer term, however, bitcoin’s deflationary power is undeniable.
“Over the years, BTC has had its ups and downs in its quest to be recognised as a credible asset class,” says Carel de Jager, head of distributed ledger technology at the Council for Scientific and Industrial Research (CSIR).
“At first, many brushed it off as a short-lived trend. Later, it was mainly linked with illicit activities. By 2020, it was labelled as an environmental disaster.
“However, recently, there’s a shift in perspective with major commercial banks and ETFs [exchange-traded funds] gearing up to gain exposure.
“Regardless of these changing views, it’s hard to deny that Bitcoin has been the standout investment of the past decade, easily outshining assets like real estate. The graph clearly demonstrates how property prices have depreciated when compared to Bitcoin since 2017.”
Read:
Six bitcoin will buy you a R1.4m house [Nov 2020]
SA house prices measured in bitcoin increase for the first time in a decade [Apr 2022]
SA house prices, measured in bitcoin, nearly doubled in 2022 [Jan 2023]
Says Glenn Jooste, founder of the Bitcoin Ubuntu community in the Western Cape: “This [graph] directly illustrates my own personal experience in saving towards a home. Using bitcoin as a long term savings vehicle can allow you more economic opportunity in the future versus continuing to save in fiat-denominated terms.”
Blockchain Solutions did a similar exercise for US house prices, and the trends are not dissimilar, as shown in the graph below.
Source: Blockchain Solutions
There’s also an as yet small but growing market for ‘crypto real estate’, with at least one broker listing properties around the world that can be purchased in BTC. Spain and Thailand have the most number of properties available for sale in BTC.
