SA house prices measured in bitcoin are rising for the first time in a decade

It’s a funny but increasingly irrelevant historical fact to tell about the most expensive pizza, each bought: In 2010, programmer Laszlo Hanyecz completed the first documented commercial bitcoin purchase (BTC), when he paid 10,000 BTC for two Papa John’s pizzas, at the time. to a value of only $ 41.

In today’s terms, the two pizzas cost R6.3 billion.

In 2012, entrepreneur and author Andreas Antonopoulos reportedly paid five BTC for a pound of coffee beans. That is R3.14 million in today’s terms.

There are hundreds of stories out there about people buying BTC early and paying out when it doubled or tripled in price, and missed out on the extraordinary gains that were to follow.

Keep in mind that in rand terms, one BTC could be bought for R659 in 2011. So when the BTC price rose to R10 000 in 2016 (this week it traded at R628 000), the early investors could not believe their luck and paid off.

What about house prices?

As Moneyweb reported in 2020, a house worth R1.4 million could be bought for six bitcoin. And in 2021, we reported that a house that cost R1 million in 2011 could be bought back then for the equivalent of 1,517 BTC. In today’s terms, it’s a pretty expensive house: 1,517 BTC is currently worth R960 million.

Read:

Today, a house of R1 million would only cost 1.6 BTC, proving the deflationary power of bitcoin.

To make it more realistic, we took the R1 million house in 2011, inflated for average house price increases over the following years, and we end up with a house that is now valued at R1.52 million.

While house prices have risen about 50% in just over a decade, bitcoin has almost risen 950X.

But there is a catch: For the first time in a decade, SA house prices actually rose measured in bitcoin. Not much, but an increase anyway.

Our original house of R1 million had increased in value to R1.46 million in 2021, which is equivalent to 2.25 BTC at the time. A year later, in March 2022, the same house is worth R1.52 million, equivalent to 2.3 BTC.

Source: Moneyweb, Ycharts.com

Morgan Stanley ran a similar exercise for U.S. house prices, and here’s the graph.

Source: Morgan Stanley

A U.S. home that cost 993 BTC in 2015 had fallen in price to 8.27 BTC by February 2022.

To keep the time scale consistent, an average-sized house in SA worth R1.16 million in 2015 would have cost 371 BTC back then, falling in price to 2.3 BTC today, even taking house price inflation into account.

What is remarkable from the above charts is that the large price gains in BTC were achieved in the years before 2017. Since then, the gains, although still impressive, are at a much slower pace than in the early years.

House Prices in Ethereum (ETH)

The second largest crypto by market value is Ethereum (ETH), which has a much shorter history than BTC. If we bought a R1 million house in 2017, it would have cost 242 ETH – which at that time could be bought for just over R4 000 per ETH.

If average house price escalations over the following years are taken into account, that house today would be worth around R1.17 million, or just over 26 ETH (one ETH traded at around R47,000 this week).

What is remarkable in the graph below is the volatility of ETH, which fell 80% in price between 2018 and 2019 before reversing the direction and increasing by 2,200% in March 2022.

The message is clear: ETH’s deflationary force, measured in rands, has far surpassed BTC’s since 2019.

Source: Moneyweb, Ycharts.com

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