A study by Madeleine revealed: The program harms second-hand apartment marketability • According to the findings, there was a 13% drop in free market transactions • Q&A

• Second-hand apartment for sale // Photo: Coco

How did the “Price to Buyer” plan affect the Israeli real estate market? The Price to Buyer launched in 2015 as the flagship program of Finance Minister Moshe Kahlon, who took office at the time. The first lots were sold for sale through the Afula and Kiryat Motzkin Entrepreneurs Tender in July 2015, and the first lotteries The sale of the apartments to buyers took place in March 2016.

A study by Madeleine on the matter shows that in the four years prior to the plan, 384,000 apartments (first and second hand) were sold in Israel, and the number decreased by 4.6% to 366.5 thousand apartments in the period from the beginning of the plan to the present. If you look only at the free market transactions, with no price per dwelling, the amount of transactions actually dropped by about 13%.

According to Eitan Singer, CEO of Madeleine Israel, "Since mid-2015, the vast majority of RMI auctions are marketed in a per-user price format, hence the sharp decline in free market transactions that has become a reality because of this. But these years have been continuous with rough government intervention in the market. Housing in general, which has led to radical changes in the market. "

How has the plan affected investors in the field?

As part of efforts to lower prices quickly, Treasury has been working to lower demand. The Minister of Finance appeared in the media, asking investors to leave the market for housing only. But he did not settle for the request and at the same time raise the purchase tax on a second apartment. Madeleine says it was a tax aimed at taking investors out of the market and leading them to buy all the goods off the shelves of contractors in 2015 and ahead of a purchase for Mecca.

You can also note the social protest in the summer of 2011 that ultimately disappointed the young couples, and when it became clear that nothing was going to improve in their favor, it translated into massive acquisitions in 2012. "Israelis have become major US real estate investors - sixth in foreign investment In the giant US. Only in the US did the investment amount to about $ 2.5 billion a year - money that could have been invested in building the country.

What was the peak year for "cost per share"?

Last year (2019) was the most productive year in terms of "CPA" transactions - some 1,300 transactions were registered each month, compared to an average of about 830 transactions in 2018. This is because of the gap between when the apartment is shipped to buyers and the time when the deal is signed and recorded.

When, in fact, is the deal registered after winning the lottery?

Unlike the free market, the apartment can be shipped to the buyer, but the transaction can only be registered after obtaining a building permit (setting the final specifications for the apartment). As of today, there has not yet been a sale deal for some 30,000 housing units that were earmarked as part of a price plan for the buyer.

How has the plan affected second-hand apartments?

The main decline in the volume of transactions between periods was in the second hand market. A cost-per-plan plan diverted demand from relatively cheap second-hand apartments to new apartments from contractors who still maintained low price levels under a cost-per-plan plan.
When focusing on declining periods in first-hand transactions in the free market (ie, excluding dwellings at a cost to the tenant), we found that this was a decrease of 23%, and this figure is also naturally explained by the fact that about 70% of Rams tenders for building saturation since 2016 have been for lots under the plan. For these reasons the stock of new apartments in the free market has greatly reduced.