Home prices fell for types of apartments in March 2012 in six of the 15 regions examined by "Globes"-Homeless classified ads site. Prices rose in two areas. The negative market trend is unmistakable, and sellers are forced to publish saner prices on classified ad sites, reflecting real market conditions.
In Tel Aviv, asking prices for three-room apartments fell by 0.8%, asking prices for four-room apartments fell by 0.5%, and asking prices for five-room apartments fell slightly. Asking prices for all types of apartments fell by up to 2% in Rishon LeZion, and asking prices for large apartments in Netanya, where is there is strong competition from new apartments offered by developers, fell by almost 3%. Asking prices for large apartments fell by 1.7% in Holon and Bat Yam, by 2.4-3.4% in the Sharon, and by 3-3.4% in Jerusalem.
The latest Ministry of Finance Red Lights survey reports a 0.4% drop in prices for new apartments in February. Prices in the Sharon fell by 1.3%, suggesting increasing competition for buyers in the area.
The two markets that bucked the trend were Modiin and Petah Tikva. Home prices in Modiin rose by 0.5% for large apartments and by 1.1% for small apartments. Price in Petah Tivka and its environs rose 3.2% for new small apartments, of which there are almost none in this market, and by 0.7-0.8% for larger apartments.
Prices are also falling in the rental market. Asking rents fell in 11 of the 15 areas examined. The average asking rent for a five-room apartment in Tel Aviv fell by 3.5% in March to NIS 9,246, although the average asking rent for three-room apartment rose by 0.3% to NIS 5,764.
It is very difficult to achieve a gross return on investment on five-room apartments of over 4% on rental apartments. The highest return is in Petah Tikva, at just under 4%.
Methodology
In contrast to other online classified ad sites, Homeless charges for all ads it airs, which makes sellers quote prices in accordance with their real expectations and avoids freeloaders. The index gives two figures: the asking price of the apartment, and the average rental yield in each area.
The listed rent is the gross rent. For a month without a tenant, maintenance expenses, taxes (assuming that the rent is more than NIS 4,500 a month), and other costs deduct about 10% on average.
The index displays the yield per apartment - the price of the apartment divided by the rent. Even if there are distortions in listed prices for sale or rent, they should offset each other if they are both in the numerator and the denominator.
Published by Globes [online], Israel business news - www.globes-online.com - on April 9, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012