Now it's final: a price plan for residents has raised housing prices in the free market - voila! Real estate

A price project for a resident in Ashdod.

Creates occupied demand (Photo: Ashdod Municipality)

An analysis of transactions in the housing market conducted by the Bank of Israel between the years 2015-2022 shows that the "Resident Price" program benefited those eligible who purchased apartments at a discount of 26-40 percent, while the buyers of apartments in the demand areas benefited from the highest financial discounts.

However, from the large study conducted by the bank, it also appears that the same government subsidy in the form of discounted price per resident and target price programs - caused apartment prices to rise in the free market, especially in localities where the share of discounted apartments was high.

In an uncompromising statement, the Bank of Israel report states: "Despite a potential moderating effect of the program on prices in the housing market, when examining the actual change in apartment prices during this period, it becomes clear that in all localities where apartments were sold as part of the program, prices increased by a cumulative rate of 8% to 90%.

These data show that apartments that were sold on the free market, new and secondhand, became more expensive to the extent that canceled the moderating effect of the "Resident Price" program

A price plan for tenants has reduced the supply of apartments in the free market

The report also shows that the average discount inherent in the prices of four-room apartments sold with government support in 2022 ranges from only NIS 308,000 in the Northern District to approximately NIS 1.2 million in the Tel Aviv District. But apart from the discounted projects, how much did the buyers of the apartments in the free market really pay

? Another one made at the Bank of Israel also shows that: "According to the results of the assessment, there is a clear positive relationship between the change in the prices of the apartments sold on the free market and the rate of transactions sold in the "Resident's Price" program in the settlement.

This means that in localities where the volume of sales of apartments with government support was high, the prices of apartments sold on the free market rose at a higher rate than in the other localities."

The report shows that this result is explained by the fact that the "Resident Price" program increased demand in the areas where it was offered. "The demand of the groups of buyers who were not eligible to register for lotteries did not decrease.

The program, which was intended for first-time home buyers, actually reduced the supply of new apartments for the other groups of buyers - housing developers and investors - and they were forced to turn to the second-hand market, because only a minority of Rami's land sales were designated for the free market. This contributed to the increase in their prices. Some first-time home buyers who decided not to participate in the lotteries, or participated and did not win, were forced to purchase apartments on the free market. Entrepreneurs who won the "price for the resident" auctions, in which there were apartments for sale on the free market, designated mainly special and expensive apartments for this market."

• Real estate

• residence

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• Bank of Israel