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Want to buy an apartment?

Look for the deals that close under the radar

Real estate prices are constantly rising, the market is boiling and if you are looking to buy or rent an apartment you may find yourself in a big problem.

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Walla!

Real Estate

Monday, 16 August 2021, 09:04 Updated: 09:48

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It is no secret that real estate prices are constantly rising, which does not really stop the demand in both the buying and rental market. In recent months, especially since the end of the third closure, many tenants and buyers feel they are unable to get an apartment. As reflected in recent reports from the Central Bureau of Statistics, the Ministry of Finance, the Ministry of Housing and bank data, which report record demand for mortgage loans.

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Huge demand, small supply - and you get stuck without an apartment (Photo: Reuven Castro)

The reasons for the rise in the real estate market according to Nir Shmol

• The corona virus has accelerated many processes of civilians who have already been quarantined three times in their homes and have previously considered changing their place of residence.

  The long stay in the house led them to make a final decision to change their place of residence.

• The demand for real estate in Israel significantly exceeds the supply, in the leading country in the number of children born each year. According to OCED data, about 200,000 babies are born in Israel each year, about 50,000 people die each year and only about 49,000 apartments are built per year. , A shortage of about 10-15 thousand housing units per year, and the gap is only growing in light of the demographics.

• The low interest rates in the world lead many people to take out loans to purchase real estate on very favorable repayment terms and with almost zero interest rates. Therefore, many investors take advantage of the low interest rates and lack of return in the bank for increased real estate purchases.

• Inheritances - Many parents inherit their money for the benefit of buying property for their children, in the understanding that today there is a significant difficulty for a young couple to save the initial capital needed to buy an apartment.

• Private homes, large balconies, garden apartments, etc. have since the Corona become a sought-after trend for both renting and buying.

  The need to stay in open spaces led the Israelis to look for a relevant, close-knit option or as part of the apartment.

• The increase in the purchase tax during the period of the previous finance minister as a window led to investors canceling their intention to purchase an apartment for investment, and converting their investments to other channels.

  As a result, there has been a significant increase in rental prices and also a decrease in the inventory of rental apartments due to the cancellation of purchases by them.

• At the height of the Corona crisis, the planning committees and state tenders worked in part, which led to a significant decrease in the planning of new projects and as a result to a temporary decrease in tenders and building permits.

  In light of this, we see today another reduction in the said low inventories in the face of demand.

• Many potential buyers who were economically harmed during the Corona period were fired or moved to the Khalat route and froze their purchase at this point for obvious reasons and moved to a rental model, which increased the demand for rental apartments.

• The establishment of new funds for rent in Israel, similar to the profit model in the United States of long-term leases, has led many entities to increase the purchase of apartments on a significant scale in existing projects or projects that are to be built.

  These funds operate under the Capital Investment Encouragement Law and purchase at least six apartments in a particular project, and fifty apartments in order to receive purchase tax benefits and additional tax benefits for the first five years.

  Only upon completion of the construction project (up to five years from the date of purchase) will these apartments be offered for rent and today there is a smaller selection of apartments for this reason.

Inputs have risen, so have prices (Photo: SM Art Studio)

So what are the steps to take before buying or renting an apartment?

Nir Shmol (Photo: Tal Shahar)

• Do not wait.

  Want an apartment?

  You are supposed to buy / rent and not procrastinate.

  Once there is a deal and it suits the customers in terms of apartment size, location and price there is no point in waiting.

  In the market of sellers and landlords someone else will come and snatch the deal if the customers are not decisive and close it without delay.

  Of course it is necessary to legally and engineeringly inspect the property before making a decision.

• Increase the search also in nearby streets, other cities and thus increase the search radius despite the desire for a specific area.

  Sometimes increasing the search range will lead to finding a better deal, both financially and in terms of housing.

• Contact friends / acquaintances / relatives who live in the desired area.

  In today's market many of the apartments are moved hand in hand with no publicity just from prior acquaintance.

  It is important that they know that you are looking for an apartment in a defined environment.

  Many deals close under the radar as part of FRIENDS AND FAMILY both for rent and sale.

• Sometimes we are captives in the past and fail to realize that something has changed.

  Rental or purchase prices of apartments have risen significantly in the past year and we have significant psychological difficulty in purchasing or renting an apartment at a higher price compared to past costs.

  It is important to understand that in a market of sellers and renters like today's market, it will be significantly difficult to find the price we received in the past months.

• Since the end of the corona there has been a global surge in commodity prices.

  A container that by March 2020 cost about $ 1,500 if it came from the East (mostly from China) currently costs over $ 12,000 on average.

  The importer does not absorb anything, everything on the container becomes more expensive.

  This is a continuation of the trade war between the United States and China that led to a global rise in prices in all areas of food, electronics, vehicles, goods and also affects real estate. The construction input index has risen in recent months at a rate of 1-0.6 percent per month. Becoming more expensive.

• In transactions with contractors, in light of the rise in the construction input index, it is important to try to hedge the index to set a threshold for it, so that if it rises above a certain amount the buyer will pay, and beyond that amount the contractor will absorb it.

  Also, a clause of option to advance payments should be inserted, as many contractors are currently unwilling to advance payments against the payments signed in the agreement because they want to benefit from the rise in the index.

• Tenants are advised to make as long-term agreements as possible with an increase in the option by a few percent or an amount set from today, and not to negotiate in the future about the increase. This is because it may lead to leaving the apartment A clause in the agreement that allows the income of a replacement tenant if we want to leave.

• Tenants who want to rent an apartment are worth checking with the funds that purchase apartments, as well as looking for the winners as part of an apartment rental project initiated by the government, in order to try to find supervised rent deals for a long period of time.

• For their customers this is a first apartment, it is worth examining the target price plan initiated by the former Minister of Housing Litzman for a purchase at a reduced price according to pre-defined areas, where the state subsidizes the price of land for the benefit of buyers.

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