Blockchain technology has the potential to revolutionize the housing sector in Australia, according to a study commissioned by a housing nonprofit operating in the country.
Per the report prepared by the Australia Housing and Urban Research Institute (AHURI) in conjunction with the University of New South Wales, RMIT University and Swinburne University of Technology, this will happen courtesy of the efficiencies blockchain technology has the ability to generate in the country’s housing sector.
Titled ‘Understanding the Disruptive Technology Ecosystem in Australian Urban and Housing Contexts: A Roadmap’, the report notes that these efficiencies could be created in functions such as the processing of land titles, with the technology being applied in the registration and management of data.
Erasing Friction, Easing Regulatory Burden
The blockchain technology study notes that the decentralized nature of blockchain applications and solutions will also contribute to reducing market friction as well as the regulatory burden in the housing sector. The technology may also open up new possibilities that currently cannot be exploited with centralized systems.
“In the case of blockchain, efficiencies that are achieved in land registries, for instance, might also enable complex title arrangements for co-ownership to evolve, possibilities that are currently not pursued due to onerous administrative requirements,” the report notes.
Blockchain technology also has the potential to make Australians feel more comfortable with adopting Internet of Things devices and applications in their homes and properties for the purpose of participating in the sharing economy. This is because when smart contracts are integrated with the Internet of Things technologies with a view of managing access rights to properties it will make machine-to-machine transactions more secure.
Making Real Estate Attractive Again
With regards to titles registration, the AHURI report notes that blockchain technology not only has the potential to cut the costs incurred in maintaining traditional land registry records but could also attract foreign investment when enhanced certainty and efficiency are introduced into the sales process. Among the blockchain applications cited as possessing the greatest potential according to the report noted were those that addressed the possibility of fraud and the lack of trust in governing institutions.
For the private housing markets, some of the blockchain applications that have shown potential include smart tenancy products capable of holding bonds in escrow, automating rental payments and managing maintenance workflows. It is also expected that tokenization of property could enhance the liquidity of this asset class.
“Currently nascent models of fragmentation of property assets may also become commonplace as blockchain technology evolves, creating greater liquidity in property,” the study notes.
Additionally, according to the report’s authors Christopher Pettit, Edgar Liu, Jake Goldenfein and Stephen Glackin, blockchain technology could also transform property development by making supply chains more transparent especially contracting and building.
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