New home purchase transactions declined by 45 percent compared with the reviewed period last year, according to the findings of the Ministry of Finance's chief economist. The reasons are understandable: a marked increase in the prices of the apartments themselves; a dramatic increase in the interest rate, and as a result, an increase in the cost of mortgage loans; and a long-standing significant economic factor called "mood."
Against the background of the various political disputes in the country, the mood, how to say, is not something, and the buyers are "sitting on the fence" until the fury passes.
The frequent interest rate increases weigh not only on the homebuyers sector ("end customers"), but also on the contractors sector. Some of them simply lifted the handbrake and do not purchase new plots during this period (certainly not in cash transactions, which are very expensive to finance), some are groaning under the cost of financing past purchases of building plots, which has risen sharply (and therefore are working to realize assets or bring in business partners to mitigate the financing expenses that have risen drastically).
At the same time, there has been a sharp decline in building starts of new homes. This is the present, and everyone knows it more or less the same. But the million-dollar question (at a high shekel rate) is: What can be expected in the residential market in the near future? As the late Plateau Sharon once said, in his heavy French accent, "The world is in the hands of optimistic people." The optimistic school of thought will argue that after the clouds are cleared from the gloomy sky, some reasonable compromise will already be closed in the president's house. Eventually, all eyes will be on the United States.
Repetition of what was
When the US begins to lower the interest rate (which is expected to happen, according to most experts' assessments, in 2024 and 2025), interest rates will begin to be lowered all over the world and here, too. And what then will happen? Housing starts are declining.
Minister GoldknopfPhoto: Jonathan Shaul,
Will the overall housing shortage improve or worsen as a result? In any case, population growth every year - does not wait. An examination of the short history shows that after every short cycle of halt in the purchase of new apartments, there comes a large outbreak of rigid demand, which returns to the residential market.
This was exactly the case after the failure of then-Finance Minister Yair Lapid's VAT 0 plan.
This was exactly the case after then-Finance Minister Moshe Kahlon's Buyer's Price Plan failed to cure the housing crisis (which has only worsened since then). The same is expected to happen soon after the political cloud is dispersed and interest rates return to lower interest rates.
Ecclesiastes (1:9) described it well - "what was is what will be."
The writer is a lawyer representing construction companies
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