The high interest rate in the economy is making its mark, and the significant slowdown in the real estate market is evident at all levels. The number of purchase transactions in the real estate market is dropping compared to last year, and with it the volume of mortgages taken out by the public.
"The slowdown is felt throughout the country, and especially in the periphery, because the market there is fed mainly by investors. Currently, young couples and housing developers find it difficult to purchase apartments due to the high financing costs. Today, investors also prefer to invest their money in overseas real estate properties, in countries such as Greece, Cyprus and Portugal," says Itzik Levy, chairman of the National Association of Realtors, in an interview with Israel Hayom.
Itzik Levy,
"It is important to emphasize: stopping across-the-board transactions is not the way to make real estate prices accessible to the public, but rather an artificial temporary halt that at this time exacts a heavy price – from damage to the public's quality of life base and morale, to significant damage to the livelihood of many professionals connected to the field, and as a result a direct blow to one of the country's main economic engines."
What is happening in the rental market?
"The developing crisis may be even more severe in the rental market. On the face of it, it appears that the demand for rental apartments will increase among young couples, who in any case find it difficult to finance the purchase of an apartment, and in light of the expected evacuation of thousands of housing units as part of urban renewal in favor of demolishing the buildings and building new buildings. In addition, as soon as investors do not buy apartments in Israel, the damage that may accumulate is that the stock of rental apartments is already small, and even more so in the foreseeable future."
What is happening in the office market?
"Commercial real estate and the office market are suffering from low demand, so we are seeing an increasing supply of office buildings available for rent, and it is difficult to find tenants for those properties."
To what extent is this crisis reflected in the real estate brokerage industry and professions related to real estate?
"The negative trend in the real estate market also directly affects the livelihoods of a variety of professionals who depend on it, including realtors, mortgage consultants, appraisers, architects, engineers and renovation contractors. In light of the sharp decline in income, some have already been forced to locate other or additional sources of income, which increases the number of unemployed and jobseekers.
Ministerial Committee on Legislation Approves: Change in the Construction Inputs Index component of new apartments, Photo: Yehoshua Ben Yosef
"Regarding real estate agents, an examination we conducted among thousands of realtors reveals an even gloomier picture than during the COVID-20 crisis. Realtors are no longer able to sell apartments and make a living for many months, resulting in more than <> per cent of them leaving the profession. This is actually about one-fifth of the number of licensed brokers who ceased their operations in the past year."
So what should the government do?
"In view of the worrying crisis that is developing, we recommend that government officials take several immediate steps: first, reducing the purchase tax for buyers in general and investors in particular; Second, to provide subsidized loans to eligible young couples."
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