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Contractors: A 7.3% increase in apartment prices in 2022
A survey conducted among contractors across the country, shows that in 2021 there is a significant improvement in the profitability of contractors, with a net profit of 10.6% compared to 8.5% last year.
The less pleasant news: 90% of contractors expect a 7.3% increase in apartment prices next year
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Survey
bdi
Building
Contractors
Housing prices
housing prices
price increase
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Wednesday, 20 October 2021, 12:58 Updated: 15:41
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Data from a special survey among 170 contractors across the country conducted by the business information company Coface Bdi ahead of the annual real estate conference of the Tel Aviv District Contractors Association, shows that in 2021 there is a significant improvement in the profitability of contractors, with a net profit margin of 10.6% among large construction contractors Compared with 8.5% last year.
Looking ahead to 2022, it appears that the volume of activity in the construction industry will continue to grow: 77% of contractors expect an increase in the volume of activity in the industry in the coming year, and 87% expect an increase in activity in the industry. This year, and 72% expect an increase in the volume of the company's activity as early as this
year.
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"Excess demand is only growing"
According to
Eyal Yanai, co-CEO of the business information company Coface Bdi,
who will present the data at the conference: As well as the morale of payments in the industry, new mortgages have almost doubled in just two years.
"" This is a market situation we have not known for many years and it continues to grow more and more.
The data certainly suggest that the situation in the construction industry in Israel is very good and is improving consistently. "
Also, in the construction inputs rose slightly last two years most of 3%, while home prices rose in this period by more than 10%. According to Yanai, This means an improvement in the profitability of the contractors.
Eyal Yanai, Co-CEO of the business information company Coface Bdi (Photo: Oded Karni)
A declining trend in the number of contractors
This year, too, the decline in the number of active contractors continued: close to 300 companies were eliminated from the industry in the first nine months of 2021, and in the last six years in total, about 1,000 companies were eliminated from the industry.
"The decline is not because of difficulties," explains Yanai.
Downward trend in the number of active contractors, 1000 construction companies have ceased to exist in the last 6 years (Photo: ShutterStock)
Significant price increase also in 2022
In line with the volume of activity of companies and the industry that is expected to grow, along with growing demand, contractors are also anticipating a dramatic rise in apartment prices.
90% of contractors expect a 7.3% increase in apartment prices, while last year only 65% of contractors expected an increase in apartment prices, and only 49% in 2019.
Further strengthening in the construction industry was also recorded in the area of credit.
58% of contractors responded that there was an increase in the ability to obtain credit to finance projects in the past year, compared to only 17% in the previous year and 37% two years ago.
Apartment prices will continue to rise: this is how 90% of contractors in Israel expect (Photo: ShutterStock)
It is estimated that the government will burden investors
"When you look at all the data and process it, and out of familiarity with the laws of economics - the expectations come true," Yanai explains.
"The expected intensity of price increases is great. Last year, the expectation of price increases was 3.5% and in practice - more than doubled."
"In the last two years we have seen prices rise more than contractors even expected. In light of this, I believe that if in the first half of 2021 there is a 5 percent increase in prices - in a year from now there will be an increase of more than 10 percent."
At the same time, 69% of contractors responded that in their estimation the government would burden investors in buying apartments and raise the purchase tax on investors.
Of these, 58% estimate that such a move is expected to curb the rise in apartment prices to a small extent.
Yehuda Ketab, Chairman of the Tel Aviv and Central District Contractors and Builders Association, Vice President of the Builders of the Country Contractors Association (Photo: PR)
"Prices are rising because supply does not meet demand"
Yehuda wrote, chairman of Contractors and Builders in Tel Aviv, vice president of the Builders Association Builders country
refers to the survey data, and notes that "the contractors, who live in the market on a daily basis is estimated there will be further price increases - are right."
"The amount of land sold by the government almost And does not arise, but only there is talk around the actual subject and nothing progresses.
In addition, the number of construction starts is declining and construction time lengthened in light of the lack of workers in the industry and in particular the wet and blocked bureaucratic getting worse every contractor had to go through in order to get a building permit. "
Reporter concludes:" a situation where supply does not meet demand, prices are rising and unfortunately Who will pay for This is how the young couples and housing developers, among others, are. "
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