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Israel’s real estate market is cooling down, but prices aren’t dropping

The real estate market continues to cool, as reflected in data presented by the chief economist at the Treasury, Shira Greenberg.

According to the data, 7,900 apartments were sold in September, similar to September 2021. A decrease in sales was recorded; compared to August it decreased by 4%. The downward trend in the volume of sales transactions continued through October.

It also appears that investor purchases fell sharply to 27% compared to September 2021 and amounted to 1,400 apartments..

The main reason for this is the rise in interest rates and the fear of stagnation in rental prices. The number of apartments in the hands of investors was reduced by 430 apartments. Without the transactions within the price per resident, the number of transactions in September will increase by 4% to 7,400 compared to the corresponding period last year.

There has been some slowdown in price-to-resident sales which may also change after recent sales promotions. Sales campaigns in Kiryat Gat and Beersheba led to a 45% jump in transactions in the southern region.

Israelis protest against rising housing prices in Tel Aviv and the cost of living, on July 2, 2022. (credit: TOMER NEUBERG/FLASH90)

It takes longer to sell apartments

Meanwhile, the cooling of the market is also reflected in the longer periods it now takes to sell an apartment, which is getting longer. According to the data, apartments sold by owners who pre-purchased an apartment before selling their previous home were on the market for 38 weeks: four weeks longer compared to September 2021.

Before that, a long time on the market averaged at 26 weeks. In the central region there was a decrease of 17% and in Netanya a decrease of 8%. To compare, in the Beersheba area there was a 22% increase.

The data for September is based on higher interest rates and a higher volume of mortgage loans.

In response to financial figures, contractors are now running numerous sales promotions. They offer financing of mortgage payments for one year, the furnishing of the apartment and partial payment of the connection differences.

However, they are not yet ready to lower prices at this stage, increasing the stock of unsold apartments.

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