The high interest rate environment that makes mortgages more expensive for buyers, as well as the political turmoil surrounding the government-led legal reform, are leading to declines in the prices of homes for sale in many cities in Israel, according to an analysis of data from the Yad2 website.
Between the last quarter of 2022 and the first quarter of 2023, there were price declines of a maximum of 9 per cent in all categories examined – apartments of 3-3.5, 4-4.5 and 5-5.5 rooms.
The significant decline was recorded in the larger apartments, which are, of course, also the more expensive and have the greatest difficulty in purchasing.
Prices of these apartments declined by 9% in the first quarter of the year in Jerusalem, where the average price of a 5.5-room apartment was NIS 3.577 million, compared with NIS 3.918 million in the fourth quarter of last year. Bat Yam ranks second in this category, with price drops of 6% to NIS 3.125 million from NIS 3.327 million in 2022.
In third place is Tel Aviv with price drops of about 4% – to NIS 5.403 million from NIS 5.638 million, followed by Kiryat Ono with a decline of 3% – from NIS 3.757 million to NIS 3.626 million.
In the category of 4-4.5 room apartments, Kiryat Ono and Tel Aviv – the former with a decline of 5% – led to NIS 3.167 million in the first quarter of this year, compared with NIS 3.328 million in the fourth quarter of last year, and the second with a decline of 4% – from NIS 4.517 million to NIS 4.326 million, respectively. Givatayim ranked third with a decline of 4% – from NIS 3.868 million to NIS 3.722 million and Herzliya fourth with a decline of 3% – from NIS 3.482 million to NIS 3.392 million.
In the category of 3-3.5 room apartments, Tel Aviv leads with a decline of 8%, to NIS 3.719 million in the first quarter of 2023, compared with NIS 4.058 million in the quarter that closed 2022. In Kiryat Shmona, there was a decline of 7 per cent, to NIS 759,817 from NIS 6,3; In Ramat Gan, a decrease of 031 percent, from NIS 2.850 million to NIS 3.2 million, and in Kiryat Ono a decrease of 880 percent, from NIS 2.781 million to NIS <>.<> million.
Ayelet Nitzan, VP Marketing Hand 2 Photography PR Erna Perry,
Ayelet Nitzan, VP Marketing of Yad2: "The sharpest declines were recorded in 5-5.5 room apartments, and it seems that these types of apartments are having the most difficulty purchasing these days due to the high interest rate, the cost of living and seasonal reasons. Thus, for example, Tel Aviv, which is the most expensive in Israel, ranks high on the table of price declines in all types of apartments, and in some cases also attracts the surrounding cities.
"Against the background of the declines, the sharp jump in interest rates since April last year, as well as the political situation and uncertainty regarding the legal reform, are cooling demand and leading to price drops in some cities."
In the rental market as well, there were price declines in the first quarter of the year. Although the Central Bureau of Statistics reported in the latest consumer price index an increase of 7.2 percent for renters in March and an increase of 4.2 percent for those who renewed their leases, if we dive into the data of the Yad2 website, we can see that in many cities there were also declines in rental prices, in all apartment categories, reaching up to 12 percent. On the other hand, there were also increases in some cities, reaching up to 16 per cent.
According to the Yad2 website, prices of large apartments (5-5.5 rooms) declined by 10% in Tel Aviv, to an average of NIS 9295,10 in the first quarter of this year, compared with NIS 353,8 in the last quarter of last year. In second place in the table of price declines is Or Akiva, with a decline of 5597% to NIS 7 a month, followed by Rishon LeZion with a decline of 6963% to NIS 6. Ramat Hasharon is in fourth place with a decline of 9849% – to NIS <>.
In contrast, in this category, rental prices increased by 16% in Hod Hasharon to NIS 8608 per month, in Haifa an increase of 8% to NIS 6077, in Kiryat Motzkin an increase of 6% to NIS 5346, and in Kiryat Ata an increase of 6% to NIS 5086.
In the category of 4-4.5 room apartments, rental prices dropped by 12% in Eilat (NIS 5108 compared to NIS 5772), Ramat Hasharon by 9%, Ma'ale Adumim by 8% and Herzliya by 5%. The most notable increases in this category were recorded in Nesher (11%, to NIS 4385) and Kiryat Motzkin (9%, to NIS 4424). On average, in the 4-4.5 room apartment category, there was a decline of 0.5 per cent, from NIS 5700 in the fourth quarter of 2022 to NIS 5670 in the first quarter of 2023.
Rental prices in small apartments declined in some cities, such as Tirat Carmel (10%, to NIS 3403 a month), Yehud-Monosson (5%, to NIS 4427), and Mevaseret Zion (4%, to NIS 4818). On the other hand, in this category there were sharp increases in rental prices in some cities, such as Kiryat Ono – a 16% jump to NIS 6090, a 16% increase in Hod Hasharon to NIS 5822, an identical jump in Yavne to NIS 4459, and a 14% increase in Ramle to NIS 4095.
"The sharp declines in the rental market are led by Tel Aviv with a decline of about 10% in 5-5.5 room apartments," explains Nitzan, "This represents a decline of about NIS 5,3 in monthly rents. This decline also affects nearby cities that record a decline of up to 4% in monthly rents, such as Ramat Hasharon and Herzliya. In 2- and <>-room apartments, you can see only a slight decline of <>% in rental prices in Tel Aviv."
Safety at work
The circle of responsibility for work accidents at construction sites will be expanded
In the first quarter of 2023, 13 people were killed in work accidents at construction sites in Israel and more than <> were injured. In an attempt to reduce the number of casualties, the circle of responsibility is now expanding so that entrepreneurial companies, developers and even representatives of condominiums in urban renewal will bear direct responsibility for safety issues and work accidents.
The change in the regulations will be made as part of the reform in the construction industry expected at the Ministry of Labor under Minister Yoav Ben-Tzur. In addition to the direct responsibility for the main contractor responsible for the project and the person ordering the work, as is customary today (regulation 6), entrepreneurs and entrepreneurial companies will also bear the burden for safety violations or, God forbid, work accidents, entrepreneurs and entrepreneurial companies directly, and other direct or indirect parties belonging to the industry. In addition, the person ordering the work will be required to take a series of actions in advance, in order to prove that he is taking the necessary safety measures. In the coming weeks, the regulations are expected to be approved by the government.
This is a precedent-setting move, which some define as a real "safety revolution." Adv. Eldan Danino, an expert in safety law and work accidents in the construction and infrastructure industry, explains: "The main significance is that in addition to expanding the circle of liability, those entities – including developers, contracting companies, project managers, engineers or owners of land rights – will be required to bear the consequences if safety defects are discovered, both on the financial and legal levels. One thing is already clear: 'What was is not what will be. Already in the near future, we expect a massive increase in enforcement at the various construction sites."
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