An iron sword war intensified the stagnation in the real estate market due to high interest rates, and home prices began to fall.
Watch the full episode of Added Value – Israel Hayom's Economic Podcast
Is this a good time to buy an apartment? What is happening in the rental market? And where was the highest return? Ohad Danos, former chairman of the Appraisers' Bureau and an expert on the real estate market, was a guest on "Added Value," the economic podcast of Israel Hayom, and answered all the questions.
According to Danos' analysis, based on the processing of 2,500 ads, in the past six months ending in November, there was a trend of price declines in the rental market, with changes between different cities and within the cities themselves. Prominent declines were in the cities of Tel Aviv (-4.3%), Modiin (-4.6%), Petah Tikva (-4.6%), Rishon LeZion (-4.0%) and Netanya (-4.0%), with price declines in most types of apartments.
In the city of Jerusalem, there has been an increase of 0.9% in the past six months. Overall, over the past six months, rental prices have fallen by 3.0 per cent on a national average, reflecting an annual rate of decline of more than 6 per cent. "The findings clearly reflect the crisis experienced by the Israeli economy since the events of October 7," Danos explains.
Ohad Danos, Photo: Shahar Shirazi
Investors in the real estate market, please note: The highest return for investors is Be'er Sheva, with an average annual return of 4.2%, followed by the city of Eilat (3.7%) as a result of a real decline in apartment prices in the city. We will explain that yield is the annual rental income divided by the value of the property, and the lower the value of the property, the higher the yield.
The lowest annual return was recorded in Rehovot at 2.5% per annum, as a result of the dramatic increase in apartment prices in the city compared to rental prices that declined.
A good time to buy an apartment?
Asked if this is a good time to buy an apartment, Danos replied: "First of all, it is important to say that we are in a period that is more suitable for risk lovers. Uncertainty is very high. Maybe this is a good time to find bargains in the market."
Danos went on to note that the trend in the real estate market will depend on the development of the war: "If we talk about the fact that the phase of taking over Gaza is supposed to end within two or three months, I estimate that during this period we will not see an increase in prices. After that, I believe that we will begin to see price increases, which we will see mainly in the areas currently affected by the fighting – the southern and northern regions."
Info, Photo: None
Where were buying opportunities for investment created?
"Anyone who today wants to invest in the real estate market and is in the mood for it is worth checking out in the south, because when you get to these places today when there is not much demand, you can find bargains there. I'm talking about cities like Dimona, Ofakim, Sderot, Ashkelon, Ashdod, Beersheba and more.
"Ashkelon and Ashdod used to be record highs in the number of transactions per month, and I think this will come back, and come back in a big way. If what happened there happened when Hamas was in Gaza, then when Hamas is not in Gaza, the situation there will be much better."
Regarding Beersheba, Danos said: "I believe that this city will come back and make a comeback. This amendment that we are making in the south is supposed to improve the situation in the south in the eyes of investors and in the eyes of people who are looking for a new place where you can also buy, where prices are still reasonable and where you can get a four-room apartment for a million shekels. It's something you can only dream of at the center."
Bank Leumi also believes that the current state of stagnation in the real estate market will not last more than a few months, and that the increase in home prices will come as early as next year. This assumes that the war ends in early 2024.
Lack of apartments
Uri Yonisi, Head of the Mortgage Department at Bank Leumi: "Throughout the past year, there were expectations of a significant price reduction of 10%-5% due to the increase in interest rates and the inflationary outbreak in Israel and around the world. Today, we see that expectations have not been realized despite macroeconomic changes, since we are still facing a significant shortage of more than 120,<> housing units."
Uri Yonisi,
According to Yonisi, "In the past two weeks, we have felt a cautious return to routine, and those who need an apartment purchase an apartment. Therefore, I believe that if the war is behind us in the first quarter of 2024, or alternatively we enter a moderate war routine, a gradual process of price increases will begin."
He lists a number of reasons for this: "excess demand, slowdown in supply, shortage of factors of production and workers in the construction industry, and more."
Find us on Spotify/Apple/Google or wherever you listen to your podcasts
Wrong? We'll fix it! If you find a mistake in the article, please share with us