Governmental research: Housing prices in Israel are rising 4% annually

The continuous rise in housing prices in Israel is a reality, most real estate professionals believe, and the only question is to what extent the prices will rise. The latest housing price indicators released by the Central Bureau of Statistics, the ILA’s land marketing tenders, the decline in construction starts, and the way buyers have been acquiring homes in recent months all support the belief that the market will be dominated by higher prices in the coming years. The Ministry of Finance, the Ministry of Construction and Housing, and the Israel Land Administration recently conducted separate research analyzes of land marketing tenders and reached nearly identical conclusions. Developers are calculating their costs assuming housing prices will rise 3% -4% per year for at least the next three years. This is a conservative estimate, as some expect prices to rise further. So, after water was dealt with in 2017 and 2018, prices rose 4.1% in 2019 and 3.2% in the twelve months ending in November 2020, in what prominent government figures, in the spirit of these times, call Covid-19, the price “outbreak”. Rises. One of the main reasons for these hikes is the lack of any coherent government policy to restrict prices due to political instability and frequent elections over the past two years. The government buyer’s fixed price program has ended and the much more limited proposed discount housing program has not yet started. Lots of young couples who previously qualified for discount housing are tired of waiting and simply buying on the duty free market. The first clear indication in the industry that market prices are rising are the amounts that developers submit to ILA’s marketing bids. For example, developers Guy and Doron Levy recently paid 41.4 million shekels for a lot to build 44 housing units in Umm Hamoshavot in Petah Tikva – 960,000 shekels per housing unit, before VAT. Five years ago, Ramy Shapiro paid 719,000 shekels per housing unit for a nearby plot of land. In other words, land prices increased by 33% while home prices increased by 18%. There were more attractive examples of rising land prices in Neve Gan in Ramat Hasharon, where appraisers expected the Land Department tenders between 1.2 million shekels and 1.3 million shekels per housing unit (including landscaping), but developers offered 2 million shekels for each housing unit. Homes in the neighborhood currently cost 33,000 shekels to 35,000 shekels per square meter, but the developers clearly believe they can get 40,000 shekels per square meter. Related articles The consumer price index fell by 0.1% in December, housing prices rose by 5,250 homes in the Jerusalem Telal neighborhood wins final approval, the soldier pays NIS 370 million to buy land in Ramat Gan in the third quarter of the year, home purchases appear in the third quarter Sharp recovery The Central Bureau of Statistics’ Home Price Index rose 1% in October-November and further higher monthly increases are expected. The index has risen 3.2% in the past twelve months, but that is not the full story due to the Covid pandemic. Prices actually fell by 0.8% between March and May at the start of the epidemic, when many expected prices to decline. But in the six months between May and November, prices rose 2.7%, according to the index. According to mortgage-taking data recently published by the Bank of Israel, the market was boiling in December, even more than in the previous six months when mortgage loans were at their highest levels in more than 10 years. Building contractors month after month are reporting record sales and if a new home took on average 19 months to sell two years ago, it takes 15 months today. Buyers who have already ramped up their home purchases are investors, lured back into the market by lowering the purchase tax for second home buyers or more. Young homebuyers and those moving to larger properties are all on the market and this explains the record mortgage record – a total of NIS 78 billion in 2020 with the average mortgage rising to NIS 816,000. If all of this was not enough to raise prices, the Covid crisis has also seen a decrease in the number of buildings that have been started, which is what the Bank of Israel warned of its impact on supply and thus prices in the medium term. The shortage of startups was exacerbated by the inability of the government’s reduced housing program to break the drawing board. Posted by Globes, Israel business news – en.globes.co.il – February 8, 2021 © Copyright Globes Publisher Itonut (1983) Ltd. 2021