Is the housing market in decline?
From the CBS data published this month, it can be seen that after a period of sharp and continuous increases in annual prices, there has now been a moderation in the rate of annual increase in apartment prices, and in some areas even decreases. In light of the great confusion
among young couples who are sitting on the fence and waiting for the right moment, with the most frequently asked question in the background Today it is:
Is now, in light of the declines, a good time to buy an apartment?
We turned to Tal Aldroti, the former chief government appraiser and head of the real estate appraisal track at the College of Administration, to describe to us how he foresees the trends in the housing market in the near future.
Is this a good time to buy an apartment? (Photo: ShutterStock)
"As in any field," says Aldroti, "even in the field of housing we see the upheaval experienced by the Israeli economy. The price drop that is giving its signals reflects the public's fear of purchasing apartments today due to the uncertainty that has prevailed in recent months in the world in general, and in Israel in particular. This is, among other things , in dramatic changes in the fields of employment, a reduction in engines of growth such as high tech, and of course the sharp increase in interest rates. This uncertainty has a negative effect on the world of real estate in Israel - with an emphasis on the residential sector." And what about the rental market? Is there also a trend of falling prices starting there
? ?;
"It can be seen that the downward trend in prices has not yet reached the area of rent and rental prices," Eldroti emphasizes, "and not only is there no decrease, but according to the evidence of the official bodies reviewing the industry - rental prices are on an upward trend."
Unlike the trend in sales transactions - rental prices are on an upward trend (Photo: ShutterStock)
In light of all the things you mentioned, when do you expect to see the main effects on the real estate market?;
"The real estate industry is a complex and cumbersome field," Eldrotti emphasizes.
"The movements and fluctuations in it are slow and take place in long-term dimensions. Economic, social and financial changes that are happening now will be reflected and affect the real estate industry only in a few months or even more.
For example, stopping or slowing down the marketing activity of residential apartments now will lead to a reduction in construction starts, which may again create a gap in about a year or two between a high level of demand and a low level of supply, which will again lead to an increase in prices.
Already today it can be seen that in many tenders published by RMI for land marketing, no purchase offers are submitted by developers."
The challenge for contractors - apartment prices are falling and credit is getting more expensive (Photo: ShutterStock)
And how do the contractors and entrepreneurs behave in all the uncertainty that surrounds the market?;
"The contractors and entrepreneurs find themselves in a new situation, and are now trying to reduce exposure to credit that has become very expensive," Eldroti explains.
"Fortunately for some of the developers, behind us is a very successful decade of constant price increases that left surpluses in their pockets that allow them to prepare for the current period. In a significant part of the projects being built now, most of the apartments have already been sold at the prices that were before the recent declines, and the construction is actually financed through the payments that come from the buyers, according to the rate of progress the construction".
"Entrepreneurs who approached and won tenders at high land prices in recent years, who took into account that the price increase will continue in the years to come, or who stocked up on land that they purchased on credit - may now find themselves faced with the challenge of the price falling against the cost of financing rising. It can be seen today that entrepreneurs are avoiding As much as possible, purchase expensive land with expensive credit, which will take years of interest payments until it becomes available and it is possible to sell apartments that will be built on it. The developers are currently focusing mainly on combination deals or urban renewal projects, where there is no need to pay in advance for the land, but instead pay for it through the construction of apartments for the landowners or the owners of the evacuated apartments".
The popular explanation: the level of prices may moderate in the next two years at a rate of between 5% and 15% (Photo: ShutterStock)
Aldroti concludes and says that "it is not possible to accurately predict how the market will behave. What's more, many times in the past, those active in the market predicted that housing prices in Israel had reached a peak, and were surprised to find out that the prices continued to climb."
"Today, there is an opinion among market officials that the level of prices may moderate in the next two years at a rate of between 5% and 15% - depending of course on the characteristics of the region and the relevant environment. Without a doubt, the issue of interest rates and the sharp increases made by the central banks in the world, and in Israel as well, is A major factor in the phenomenon of currently slowing the increases in apartment prices."
"The issue also affects the market with the developers, whose financing expenses have increased, thus reducing the financial flexibility and profits from any construction project - as well as on the side of the buyers, whose mortgage terms required to purchase the apartment have been tightened and become more expensive at a sharp rate."
Real estate
news
Tags
real estate