Israel’s real estate market frozen although prices are not yet falling. Although the latest index showed that housing prices rose 0.1% between November-December 2022 and December-January 2023, it seems likely that the trend will change soon. If three months ago housing prices were rising at an annual rate of 20%, the annual rate has already fallen to 14.6%.
New apartments respond more quickly to changing trends and “Globes” calculates that after taking out new apartments in the government Mechir Lemishtaken program, prices have fallen 4.7% between November-December 2022 and December-January 2023 and at an annual rate of 20%. The average new apartment has already fallen NIS 90,000 in price.
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The Ministry of Finance chief economist, which published its monthly review of the housing market, reported sales campaigns in Kiryat Bialik in Haifa Bay. Two months ago, the average price of the apartments purchased there was NIS 1.57 million, which is only 16% higher than the average price for apartments sold as part of the Mechir Lemishtaken program in Kiryat Bialik in 2022. “Globes” found that a year ago the price of a new apartment in the city on the free market reached NIS 1.8 million, and was about 40% higher than the price of an apartment in the Mechir Lemishtaken program.
New homes market in freefall
Israel Builders Association president Raul Srugo said, “Those who need an apartment should check what happened immediately after other periods when the housing market froze.”
He is right, but ignores for obvious reasons another part of the advice, to also check what happens during the freeze. Because when we talk about stagnation, we talk about demand and construction volumes at low levels, but at the same time also about price falls and these are already frequenting the market.
The real estate surveys of the Central Bureau of Statistics and chief economist as well as the Bank of Israel’s mortgage survey published earlier this week, reinforce the assessment that the market is in rapid decline. According to the Central Bureau of Statistics, there is a 4.3% decrease in the number of new apartment purchases each month. This is a very fast decline, which a few months ago was even faster, and it is this that forced developers to introduce price cuts, which slows down the decline in sales, but has still left developers stuck with an inventory of about 53,000 unsold apartments and with commitments to start projects where presale deals have been completed.
Published by Globes, Israel business news – en.globes.co.il – on March 16, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.
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