The stagnation in the real estate market is reflected in a variety of data published recently, ranging from a decline in the number of homes sold to a decline in the volume of mortgages taken. A new figure published yesterday by the Central Bureau of Statistics indicates that the current stagnation in the real estate market may also affect home prices in the coming years. According to the data, in the 12 months from April 2022 to March 2023, construction began on some 62,480 apartments, a decline of 10.4 per cent in the number of building starts compared to the previous 12 months.
Photo: Gideon Markowitz // The leading city in the sale of new apartments is Ashkelon,
The data can be explained by two main reasons: the high interest rate makes it difficult for contractors to obtain financing for new projects and makes them less worthwhile, and the inability of buyers to buy apartments in the current market conditions. According to sources in the real estate market, the data may be reflected in a year or two, when the high interest rate in the economy falls back and demand for housing begins to "wake up" again.
It was also reported that a quarter of the apartments (about 26.9 per cent) were built within the framework of urban renewal, of which about 74.4 per cent were in the framework of National Outline Plan and Pinui-Binui. The leading cities in building starts in the 12 months from April 2022 to March 2023 are Tel Aviv-Jaffa, Jerusalem, Rishon LeZion, Bat Yam, Be'er Sheva and Ashkelon.
Jonathan Katz, Chief Economist at Leader Capital Markets: "In the first quarter, the number of building starts declined to an annual rate of 55,7 units (seasonally adjusted), from 58,5 a quarter ago and 74,8 a year ago. This decline derives from a sharp increase in financing costs and uncertainty regarding home prices going forward. The number of finished homes declined more sharply, to 51,3 units in the first quarter, from 56,5 a quarter ago and 52,4 in all of 2022.
"A reduction in the number of finished apartments is liable to support an increase in housing prices, including rental prices measured in the CPI."
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