Data published yesterday by the Chief Economist at the Ministry of Finance, Shira Greenberg, indicate one of the weakest months in the volume of home sales in the past two decades, in which 6,785 transactions were made for the purchase of new and second-hand homes, representing a decline of 46 percent compared with March of last year.
However, from a nationwide perspective, the declines in the north and south were more moderate than in Tel Aviv and the center. The economist's survey shows that the interest rate increase mainly affects expensive apartments, and in the center of the country.
The Chief Economist noted that "there has been a marked strengthening in the rates of decline in contractor sales in the free market in recent months in high-demand areas in central Israel, while moderation in rates of decline in the periphery moderates the national rate of decline."
Why is this happening? Real estate experts analyze:
The city of Kiryat Gat (Photo: ShutterStock)
"What is expensive to the middle class in the center, it can afford in the periphery"
Raz Schreiber, owner of Inhouse Marketing Residential Projects: "There is no doubt that the renewed boom in the periphery is due to the dramatic increase in prices in the housing market. Finally, in the periphery you can find apartments in a greater variety than in the center that are intended for the middle class, and what is expensive for the middle class in the center can afford it in the periphery."
"We see an example of this in a number of cities, including Kiryat Gat and the Carmei Gat neighborhood. Over the past decade, the price in the neighborhood has soared by more than 80% and we expect the price to continue to rise, as the trend in the real estate market continues in the status quo. There is great importance in developing residential areas outside of Tel Aviv and the periphery in particular, and we can definitely see that there is high demand for it."
"Many young couples and housing developers have grown tired of waiting for prices to fall"
Dror Toren, CEO of America Israel Investments: "Now it's official, the slowdown in the housing market is felt more moderately in the periphery than in the central region, where housing prices are very high. In many peripheral cities, particularly in the north, deals are being signed, albeit on a smaller scale than a year ago. The uncertainty in the economy and the increase in interest rates affect buyers, especially investors, but there are many young couples and housing developers who are tired of waiting for prices to fall."
"These buyers have come to the conclusion that they need to take advantage of the fact that prices have not risen for several months, and when pent-up demand erupts, a renewed rise in prices is expected. At the same time, there is competition in mortgage banks for each customer, so that they are able to receive financing terms that suit their needs."
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Housing upgraders can purchase a larger apartment in the periphery without dramatically increasing the mortgage."
Tomer Bohbot, Anglo-Saxon franchisee in Be'er Sheva: "The data reflect what we have been thinking in the market for some time. Government programs such as "discounted apartments" affect the prices of new homes. On the one hand, they pull the average downward, but on the other hand, they attract young buyers who are actually investors who rent out the apartment and continue to live in the center."
"Be'er Sheva is still an attractive destination for solid investors. There is a supply of apartments in the city at a price of NIS 600,4 to NIS <> million, which yields a yield of about <>%, more than double that in high-demand areas. Housing developers can purchase a larger apartment in Be'er Sheva without dramatically increasing the mortgage, so we still see more transactions than in the center."
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