Auctions at the highest possible price for RMI are expected to skyrocket housing prices.
A marketing method that causes prices to rise
Photo:
envato elements
Produced by the Department of Special Supplements
How will housing prices fall?
Land prices are soaring dramatically and soon developers on the land will pay a price similar to the price of the apartment.
Of course in such a situation it is impossible to lower prices.
The state itself returned to the land auctions the all-too-cost method, i.e. the land speculation is repeated.
It can be said that the cycle of the housing protest has closed, which tried to herald the beginning of a change in the trend in the Israeli real estate market. Exactly 10 years later, we returned to the starting point.
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What we did not have on the way: 5-pound hammers (but not at construction sites, but in speeches by Finance Minister Steinitz), supertankers (of Netanyahu), who only kindled the flames, zero VAT (of Lapid) that never happened, and price per occupant ( Of Kahlon) which caused unnecessary waste.Then Litzman returned, after being burned at the Ministry of Health, and took us back 10 years to the era of speculation and price increases, along with negligible benefits for purchases in the periphery.
Oh yes, and on the way we still had one small crisis, which has been shaking our world for a year.
For a brief moment it was perhaps the only chance the young couples had for a significant drop in prices.
But that did not happen either.
It turns out that the active forces in the real estate market are running long distances. And what is a global pandemic, crushing the poor, that will interfere with the life of the economy?
At a meeting of the Israel Land Council, held in early September, the plan of the council's chairman and Minister of Construction and Housing Yaakov Litzman Housing was approved at a reduced price. The new plan effectively abolished the price per occupant, led by former council chairman Moshe Kahlon for the past five years.
The country is divided into 3 areas, where different marketing methods will be carried out.
Continued marketing in peripheral areas is questionable.
Political controversies prevent the government from discussing a decision-making proposal, which is supposed to budget for subsidizing development and providing grants to buyers.
More than 11,000 housing units are falling hostage to this political game.
In areas of demand, the State of Israel returned to marketing land using the tender method that was used before the appointment of Kahlon - all at the highest price.
Tenders that will lead to increases
We saw the results of this old-new marketing method in tenders published in Ramat Hasharon last month.
Dozens of developers competed for the complexes to build 482 housing units.
According to the winning proposals, the developers will pay significantly higher amounts than the land assessment conducted by the Israel Land Authority.
The cost of land and development for a housing unit will be more than NIS 1.9 million before VAT. Assuming that the cost of building an apartment will be no less than NIS 1.3 million, plus an entrepreneurial profit of 15% and VAT 17%, do not expect a price lower than 4.3 a million shekels.
Relatively new apartments in the neighborhood are currently being sold for an average of NIS 3.5 million, so the win reflects an expected meteoric price increase of 23%.
In another tender, published several months ago in Modi'in, the developers will pay about NIS 1.2 million (before VAT) for each housing unit. Here, too, the winning bid was higher than the assessment.
This is a sweeping phenomenon, and not the whim of one entrepreneur or another.
There is a real land shortage in areas of demand, and the state seeks to take advantage of the situation at the expense of the general public.
Are we facing a wave of price increases in the central region?
Nir Mesika, former deputy director of the national housing headquarters: "The results obtained in the tenders in Ramat Hasharon and in Modi'in indicate that land auctions for the most part are a mistake that comes first and foremost at the expense of young and homeless couples."
After 5 years in which the previous chairman of the council, Moshe Kahlon, made sure to market all the land in a marketing method in which developers compete for the cheapest price per square meter (price per occupant), the new decision actually opened a dangerous race that would sweep the entire housing market.
Entrepreneurs will have to pay higher amounts for the land, and young couples will see with their own eyes how the dream of reaching a roof at a fair price in the center of the country, close to family members and the circle of friends and employment, will go into the unknown.
If someone around the council table thought that by means of this decision he would send the young couples to the periphery, he should recalculate a route.
The Negev and the Galilee should be flourished not by increasing the cost of living in the center of the country, but in a much broader envelope, which includes quality education and appropriate employment solutions.
Next check on the way
This summer will mark the tenth anniversary of the famous tent protest, which began on Rothschild Street in Tel Aviv.
If the next government is not educated to change direction, it is likely that the sights we saw that summer will be child's play compared to what awaits us all.
"The real estate market today is like a boiling lava after a volcano erupts," says real estate expert Ohad Danos, former chairman of the Bureau of Real Estate Appraisers. "Whoever enters will be burned. If what we have seen is the first swallow of what is about to happen, then we have no big news for the buyers of the apartments in the coming years."
But why exaggerate, when reality slaps us in the face with cruelty and real money, which has been spilled on land in recent tenders from the Israel Land Authority.
In Petah Tikva in the Hadar HaMoshava neighborhood, a record was broken when no less than NIS 960,000 was paid for land per unit, which brings us to an average value of an apartment for sale of about NIS 3 million. A relatively new apartment in the neighborhood is sold today for an average of NIS 2.4 million. Of 25%.
In the locality of Azor, they paid no less than NIS 835,000 for land per unit. The immediate translation is about NIS 2.9 million per apartment on average. Today, the average price in the city is about NIS 2.2 million. An increase of 31%!
Readers of these lines may tell themselves at this point that it is best to move to the periphery.
Bad news, the situation there is no better.
In the locality of Adam - Geva Binyamin, no less than NIS 500,000 was paid for land per housing unit, reflecting a price of about NIS 2 million for a built apartment, an increase of 33%.
The Netivot list, where the state obtained a price of NIS 322,000 per unit of land. NIS 1.4 million for a built-in apartment will bring us a price increase of about 40%, compared to the current average price of about NIS 1 million.
And all this goodness meets us precisely in the Corona period ...
Produced by the Department of Special Supplements