On video: The government approved the state budget for 2024 15.01.2024/Video (upload): Omer Miron / L.A.M., Sound: Ben Peretz / L.A.M.
And sometimes the celebration is over.
The crisis in high-tech caused the drop in apartment prices even before the war/ShutterStock
The number of exits of the high-tech industry and its services during the year 2023 was 45, this after 72 exits in 2022, in which there was a drop compared to the record of 171 in 2021.
In fact, the number of exits decreased in the past year, in which the war also broke out, to a low that had not been seen in a decade, 45 exits were in 2013, according to a report by the accounting firm PWC, one of the largest in the world. Capital raising last year was $7.53 billion, similar to what it was a decade ago, in 2013, after it stood at $16.89 billion in 2022 and $82.49 billion in the peak year 2021.
Suddenly the easy and legitimate money of the exits disappeared from the Gush Dan region and the center of Israel. Fewer exits, they are a sharp decrease due to the high-tech people buying apartments at pepper prices in the center of the country. Apartment prices in the center of the country have been falling for nine consecutive months at an annual rate of 5.2%, they have already started to fall in February-March.
The number of salaried jobs in high-tech held up, and then came the war and reduced the number of workers in the well-remunerated sector, from a peak of 399,600 jobs in June to 393,600 in October. Since then, it is possible that the number continues to decrease these days, but there is currently no data from Helm "S.
The average salary in the high-tech sector dropped from a record high of 31,645 in March 2023, when the protests against the government took place in Rehovot, to 29,626 shekels in October, all nominal, according to the CBS data.
Fewer exits, fewer employees and a real salary that is beginning to bite into the ability to purchase non-mobile assets, not to mention On the justified national depression due to the war, they all caused a drop in apartment prices in the heart of Israel, in Tel Aviv.
Building.
Prices in Tel Aviv dropped by 10% in three months/image processing, Shutterstock
Apartment prices in Tel Aviv fell in the three months preceding October-November at an annual rate of 10.3%.
Apartment prices in the capital city of Jerusalem, which has become a city of refuge these days, have risen in the last six months at an annual rate of 2.3%.
In Haifa house prices fell for three months at an annual rate of 3.6%.
In the south, which has little to do with high-tech, apartment prices rose during that period at an annual rate of 4.5%.
The south also includes Ashkelon, which apparently has a kind of influx of apartments there, perhaps out of the hope that after the eradication of Hamas it will be a sought-after seaside city.
House prices in the north were strong until the war, within two months until October-November house prices there fell at an annual rate of 8.7%.
The prices of new apartments are falling at a faster rate than the prices of all apartments, which include both existing and new apartments.
The prices of new apartments decreased in October-November by 0.6%, during the last year they decreased by 3.94%, after a rise of 23% in the year preceding October-November 2022, which means that we are facing a real trend reversal.
In the last two years, the prices of new apartments have increased by 18.15%.
In the last three years, the prices of new apartments have increased by 31.3%.
Please note, at the end of November, two months after the war, the contractors had 63,580 unsold apartments, of which 19,420 in the Tel Aviv District and 16,050 in the Central District.
The number of unsold apartments reached an all-time high, an increase of 12,910 apartments compared to November 2022 and an increase of 19,652 since the low of April 2022.
The number of months of supply of new apartments compared to actual sales was 20.7 months in August last year, compared to 16.9 months in August 2022 and compared to a low of 10.4 Months in January 2022. The higher the number of unsold apartments compared to the actual sales in that month, then the meaning is that the contractors are having difficulty dealing with the swelling inventory and oppressing their listeners.
A construction project in Tel Aviv.
A steep drop in apartment prices, which will continue to increase/ShutterStock
Stifling funding
The hope that the interest rate will drop soon will be disappointed, according to our assessment.
The first months of the year will surprise badly.
Not only that: the interest rate determined in the capital market for the financing and support of residential construction or any other construction in the business sector is mainly influenced by the price of capital that the government is forced to pay in order to raise linked and non-linked bonds of various durations in order to finance the rising tide of the deficit due to the war.
Yes, the government's expenses Sayings, while the government has difficulty finding sources that will reduce it due to political objections, such as coalition funds, or powerful sectors of powerful groups in Israeli society who continue to be pampered over the years, such as those with very high to scandalous salaries of senior public sector officials.
Capital raising by the government is increasing , the nominal and real interest rates will continue to rise and will adjust themselves to the cost of raising the treasury's capital. Higher interest rates in the financial and capital markets will burden the contractors who do not remember such a heavy burden on their business activities for decades. Without a choice, the result is the continuation of the reduction of the prices of new apartments by the contractors as already Happens in practice. Any contractor or contracting company that does not lower the prices of the apartments, in order to return the loans to the banks, will soon feel the banking system strangling their necks.
Not only that, the banks must adapt to the new reality that will hit them as well;
More bad debts due to the economic crisis that is emerging at this very moment and may last close to two years, more phenomena of non-compliance with mortgage payments by households, an increased demand for a re-distribution of the monthly repayment of mortgages due to a decrease in the net income of family units, and also due to a collapse in the scope of well-paying jobs .
More independent businesses are collapsing due to the lengthening of the reserves, more families who cannot pay back normal debts they took to maintain the standard of living.
Above all of these stands the special tax that the government intends to impose on the banks as part of the budget proposal, an additional tax of 9%, i.e. to 26%, a temporary tax for two years - and in Israel the temporary may become permanent.
The result will be that the banks, as well as other credit providers from the institutional field, will have no choice but to pressure the contractors and others to repay debts, now, immediately, on the dates of the settlement schedule and the loan and the original accompaniment, no postponements.
Banks will eventually be forced to set aside more for bad and bad debts.
The result will be additional pressure to reduce the prices of apartments, not only the new ones but also second-hand apartments, which will naturally be affected by the decrease in the prices of the new apartments.
There is a positive side to the drop in apartment prices, the drop in apartment prices that is happening right now will benefit sections of the population, including the reservists, who have not been able to purchase an apartment for years.
It is true that there is a current claim that the rate of active construction sites is slightly over half due to the lack of professional manpower, mainly for wet work in construction which is the share and expertise of the 90,000 Palestinians from Judea and Samaria, of which 75,000 are regulated and legal.
Today the Palestinians are sitting in their homes because of the war and are hungry for a living.
As long as the war continues, the contractors together with the immigration authority in the Ministry of the Interior and the government will be forced to find solutions for the workforce both through the renewal of permits for Palestinians to enter Israel and through foreign workers, whether from Eastern Europe or the Far East.
This problem will not be able to affect the supply of finished apartments for years and lead to a renewed increase in apartment prices in the coming years.
Not only that, we must remember that the price of land, a fundamental component of the price of apartments, especially in the center, is in free fall.
This allows for a decrease in the prices of the apartments, the construction of which will begin now.
The failures of the Israel Land Authority's marketing of construction land are happening today and now, including tenders for which not even a single bid was submitted.
The land bubble in real estate prices is bursting mainly in the face of speculators.
A budget that fails to rise above coalition considerations, is looking for funding sources.
Netanyahu and Smotrich/Government Press Office, Haim Tzach
citation
The Treasury wants to put order in the taxation of capital gains from buying and selling investment apartments.
Owners of a single apartment are exempt from appreciation tax due to a real increase in the value of the property when they sell an apartment they purchased many years ago.
Most apartments are still exempt from payment of the entire appreciation, the real increase in value of the property for the period before 2014.
On the increase in value from 2024 until the sale today, the property owners owe a full tax at a rate of 25% of the appreciation, that is, the increase in the real value of the property.
This benefit is equal to capital for most of the assets in the established Israeli public.
In fact, until today, until the amendment now proposed in the current budget proposal, there was discrimination in favor of investors from multiple assets compared to those who invested in another savings channel, let's say in the capital market;
Two savings channels - one exempt for the period before 2014 and one from current tax each year according to the annual report submitted to the tax authorities.
Why?
Because the powerful in the country and the economy always decide in their favor, it doesn't matter who sits in the Knesset, who is in the government or what the coalition structure is, the legislation and the provisions of the law will always be in favor of the centurion.
Now that the Treasury is in desperate need of money, capital, and revenue, it intends to correct the distortion: starting in 2026, whoever sells an apartment subject to appreciation tax will be liable for the full appreciation tax, in fact a tax on capital gains, for the entire period from the date of purchase to the date of sale, one and all. There is no longer an exemption for the privileged in Israeli society.
If the legislation passes (there are still hurdles in front of it due to stakeholders from the upper deciles), it will encourage apartment owners to get rid of an apartment or house they own, before the introduction of the amendment that will bring about a more just society. This is another weight and pressure for the decrease in apartment prices, which are not falling at all. So if you sell, it is better to sell as quickly as possible so as not to fall into lower apartment prices and finally to pay full appreciation tax.
Time will tell if the justified proposal to amend the appreciation tax will pass, what is certain is that the treasury needs For money, capital, now. That is why I again propose that for a period of a year or a year and a half, while the budget deficit is swelling, the purchase tax for investors seeking to purchase apartments should be reduced, in order to improve the government's cash flow, immediately, and also to allow accepting hands for the apartments that will be sold because The state of the economy and the legislative changes in the field of real estate.
It is better to collect a lower purchase tax and accumulate budget resources than to raise more and more capital in the bond market with rising yields to the detriment of the treasury. The goal of raising resources for the state coffers is budgetary stability, as much as possible, which is the order of the hour. It is essential for a healthy economy, a stable, alive and kicking economy, mainly thanks to the high-tech sector which is a source of taxes and good growth.
Maybe not for exits in huge sums, but at least an interesting and challenging job that benefits the individual, the family, the company where they are employed, the local authority and the treasury.
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housing prices
High tech