The generational divide is increasingly visible in wealth distribution, with real estate being one of the most significant markers of this disparity. Older generations, particularly those over 60, are sitting on a substantial portion of the housing market, while younger people, particularly Gen Z, struggle to enter the market. With the cost of living squeezing budgets and housing shortages affecting many regions, it’s no wonder that many young people are beginning to realise that inheritance may be the only path to home ownership. However, not everyone will be fortunate enough to inherit, leaving a growing number of people locked out of the real estate market entirely.
The stark figures tell the story. In the United States, individuals over the age of 60 hold over half of the real estate market, while people born after 1980 control just 12%. This significant divide means that younger people, particularly Gen Z, may need to wait decades before they can access any of this wealth through inheritance. The younger generation also faces the additional challenge of high interest rates, which have made mortgages increasingly difficult to secure. For many, home ownership remains an elusive dream, especially as the price of property continues to rise, making it unaffordable for first-time buyers to enter the market.
Boomers often point to their own struggles with getting on the property ladder, but those arguments don’t hold the same weight for the younger generation. For Gen Z, the reality is that they face a lifetime of paying someone else’s mortgage as renters. Landlords can ensure their costs are covered simply by raising rents, while benefiting from the appreciation of property values. This creates a self-reinforcing cycle that further entrenches financial exclusion, making it even harder for renters to break out of the system and invest in their own property.
In this context, fractional ownership of property has emerged as a potential solution. Fractional real estate investing allows people to own a share of a property rather than the entire asset, opening the door to property ownership for those who cannot afford the steep upfront costs of a full home purchase. While fractional ownership can’t solve the housing crisis, it does offer an accessible entry point to property investment, which has long been seen as a key pathway to building wealth.
For example, a first-time buyer who struggles to save enough for a down payment could invest their savings in a jointly owned property, where they could benefit from rental income and any appreciation in property value. However, fractional ownership has traditionally been difficult to implement due to the legal complexities involved in creating meaningful shares in real estate. The idea of fractional ownership via blockchain tokenisation has been around for some time, with Ethereum and other platforms promising to facilitate the process through smart contracts and onchain transactions.
However, despite the promise, the legal and operational issues around tokenising real estate have proven challenging. Until recently, the concept of tokenising real-world assets has struggled to gain traction with mainstream institutions. That’s starting to change, however, as the increasing economic challenges and interest in fractional ownership have pushed the real estate industry to explore more innovative solutions. As a result, there’s been a rise in companies that facilitate offchain fractional ownership, though these models still carry significant risks for buyers and investors.
The promise of blockchain lies in its ability to make fractional real estate ownership more accessible and transparent. By using blockchain technology to create digital tokens that represent shares in real estate, it becomes possible to ensure that ownership and co-ownership status are publicly available. With the right technology, it would also become easier for people to buy, sell, and trade their shares of property, even if they are only holding a small fraction of the asset. In this way, blockchain can help democratise access to the real estate market, allowing more people to invest in properties that would have previously been out of reach.
Current fractional ownership models often come with concerns over whether the acquisition represents a true share of real estate or if it’s simply a security contract. Issues such as how many people share ownership of the property, how shareholder votes are counted, and what the rules are for selling a share remain points of contention. Onchain fractional ownership models could resolve many of these issues by making the rules of co-ownership transparent, easily accessible, and immutable, which helps to instil confidence in the system.
By tokenising real estate shares, blockchain allows for quicker, more liquid markets. Investors of all sizes can participate in property ownership, no matter their portfolio size, and can diversify their investments across a range of properties. This is a major departure from the current model, where younger individuals have limited access to diverse property portfolios. With blockchain, investors can also gain the ability to buy and sell fractional shares of real estate much more easily than they would in the traditional system.
The key advantage of tokenising property on blockchain is the creation of a truly liquid market. Traditional fractional ownership models rely on centralised companies to facilitate transactions, making it difficult for people to trade or sell their shares. In contrast, blockchain’s decentralised nature enables property shares to be traded more freely, creating more opportunities for people to buy and sell their stakes in properties. The liquidity created by blockchain is one of its most significant benefits, making it easier for people to invest in real estate and allowing them to diversify their portfolios in ways that were previously impossible.
The idea of Gen Z being locked out of the real estate market for good is a sentiment shared by many, but tokenising real estate through blockchain technology may provide a solution. By fractionalising ownership and creating tokenised property shares, blockchain has the potential to unlock property investment for younger generations. With increased transparency, accessibility, and liquidity, blockchain technology could make real estate investing a more inclusive endeavour, providing Gen Z with the opportunity to take their first step onto the property ladder.
Denis Petrovcic, the co-founder and CEO of Blocksquare, is at the forefront of this transformation. Blocksquare is a blockchain-based real estate solutions company that is helping to facilitate fractional ownership through tokenisation. With a background in both finance and technology, Petrovcic is also an active member of FIBREE (The Foundation for International Blockchain and Real Estate Expertise), where he contributes to advancing the use of blockchain in the real estate industry. His work aims to make real estate investment more accessible and secure for everyone, regardless of their financial background or status.
As blockchain technology continues to evolve, its potential to reshape the real estate market and make property ownership more accessible for younger generations is clear. The days of being locked out of the property market may be numbered, with blockchain offering a way for everyone to get a foot on the ladder — even if they don’t have the funds to buy a whole property. The tokenisation of real estate shares may not solve the housing crisis, but it certainly offers a new, more inclusive path to property investment, and it’s one that could have a profound impact on the next generation’s ability to build wealth.
