The latest figures from the Central Bureau of Statistics show a 2.6% increase in housing prices over the past year indicating that buyers have stopped sitting on the fence.
A survey conducted for "Globes" by land appraisers Ronen Wagner and Einat Kruvi from the Wagner-Kruvi firm paints a more complex picture. Wagner and Kruvi examined 60 deals for the sale of homes in 18 cities in late 2018 and compared each of them to sales of similar homes in the same building or a similar building nearby in late 2019.
Wagner and Kruvi found that while there were increases and decreases of various sizes in various cities in Israel, the national average price for similar homes had not changed. "In view of the survey findings, we can state that the nationwide price of housing remained steady in the past year," he said.
Wagner-Kruvi took their sample from the Israel Tax Authority's website. Since the data fed into this website are sometimes wrong, the analysis was conducted two ways: once for the price per square meter (the price of the home divided by the reported area) and once for the price per room (the price of the home divided by the number of rooms). It is evident that the rate of increase in price for each of the deals is not necessarily the same for both methods, but the overall average of both methods leads to the identical result.
Wagner and Kruvi say that because of the difficulty in finding deals involving the same properties, the number of deals carried out on the specific dates sampled in each city is small, and does not necessarily reflect the variance in price in that city. When all of the deals on the specific dates in the 18 cities sampled are added and weighted together, however, it definitely indicates the market trend over the past year.
Wagner and Kruvi's sample included large cities - Tel Aviv, Jerusalem, Beersheva, Haifa, and Rishon Lezion; medium-size cities, such as Ramat Gan, Rehovot, Ness Ziona, Givatayim, Ganei Tikva, Hadera, and Bnei Brak; cities recently under missile bombardment, such as Ashdod and Ashkelon; and outlying cities, such as Eilat, Kiryat Gat, and Afula, which have attracted investments in recent years because of their attractive property prices.
Only a slight price increase in Jerusalem
The survey showed that prices did not rise or fall sharply in most cities. A 97-square meter, four-room apartment on the 19th floor of a residential building at 17 Beit El Street in the Neve Sharet neighborhood of Tel Aviv was sold for NIS 2.825 million in December 2018. On the 18th floor of the same building, a slightly large apartment (106 square meters) was sold for NIS 3.08 million in December 2019. According to Wagner-Kruvi's analysis, the price per square meter declined by a negligible 2% (from NIS 29,157 to NIS 29,057).
In Jerusalem, a 118-square meter, four-room apartment at 25 Hanevi'im Street sold for NIS 4.11 million on December 31, 2018. A 126-square meter apartment in the same building sold for NIS 4.48 million in late October 2019, almost the same price per square meter.
In Rehovot, which has been developing rapidly in recent years, two deals were compared in the same building at 6 Ephraim Katzir Street in the city's prestigious Rehovot Hamada neighborhood. A 126-square meter five-room apartment on the eighth floor was sold for NIS 2.58 million in December 2018, and an apartment with the same area on the third floor was sold for NIS 2.5 million in late October 2019. According to the price per square meter, the price fell by 4%, and the price per room by 3%, but it is likely that the price also fell because of the lower floor - an apartment on the high floors in new buildings is usually more expensive. In all the deals sampled in Rehovot, prices remained the same.
In Ganei Tikva, another rapidly growing town in recent years, the price per square meter was down 1%. A 143-square meter, six-room apartment on the eleventh floor at 17 Hameshi Road was sold for NIS 2.84 million on December 31, 2018. A similar apartment on the first floor in the building was solved in November 2019 for NIS 2.73 million. Here, too, the different in price is attributable to the lower floor.
Appraisers: The increase in price is within the realm of random differences
"Globes": Is the stagnation in prices a result of the government's policy?
Wagner: "Not necessarily. It appears that it reflects the unstable political situation in the country, which is causing economic instability and public concern about the unknown. Move-up buyers, for example, are buying less as a result of anxiety about undertaking obligations that they may not be able to fulfill. Concern about governmental measures aimed at making up the state budget deficit after a government is formed and a fall in prices as a result of economic instability are putting the market into a state of stagnation."
Wagner and Kruvi add, "Israeli investors have been thrown out of the market by heavy taxes. Instead of leaving their money in Israel and boosting prosperity in Israel, the Israeli government has made the Israeli investor participate in building Eastern Europe and other countries."
The drop in prices is more prominent in outlying areas
In some cities in outlying areas, where prices were low to begin with, the drop in prices has been more noticeable.
In Kiryat Gat, for example, a city flooded with investors, a 58-square meter, three-room apartment on the second floor at 133 Malkei Israel Street was sold for NIS 730,000 in December 2018. An apartment identical to it was sold for NIS 650,000 in October 2019, an 11% drop according to both measures.
In Eilat, an 88-square meter, four-room apartment on the fourth floor at 5114 Tzur Street was sold for NIS 850,000 a year ago. A similar apartment on the second floor of the building was sold for NIS 845,000 in October 2019.
According to the average of deals sampled in Ashdod and Ashkelon, the missile barrages did not affect housing prices this year. No change in prices occurred in Ashkelon, and prices even rose in Ashdod. For example, an 87-square meter, three-room apartment on the fifth floor at 5 Petah Tikva Street in Ashdod was sold for NIS 1.22 million in December 2018, and an 85-square meter, three-room apartment on the eighth floor at 3 Petah Tikva Street was sold for NIS 1.28 million, although the increase in price in this case is attributable to the higher floor.
The real estate agents also confirm the trend emerging from our survey. Ariella Laor from the Isra-Mag brokerage in Ashdod says that the market has ground to a halt. "People are asking for much higher prices, but there are no deals. With the political situation, everything is stagnating, and the security situation is no help. Sale of apartments in Ashkelon or Sderot is advertised, but no one is calling. Foreign residents have stopped buying here because of the Prohibition on Money Laundering Law, and because of the high purchase and betterment taxes."
Another broker in Ashkelon says that he even saw a fall in prices in the past year. He says that a new four-room apartment on the seventh floor in the Agamim neighborhood, which was marketed a year ago for NIS 1.35 million, was sold this month for NIS 1.19 million. "In secondhand apartments in the old neighborhoods, such as Barnea, prices are steady, while in poorer neighborhoods, there is a slight decline in price," he says.
What about the security situation?
"In my opinion, there is no connection to the security situation. What has happened is that investors have vanished from the scene because of taxation. There were a lot of investors here, and they have gone to invest overseas, which is a pity."
According to Oshri Peretz from Oshri Nehasim, housing prices in Ashdod rose this year, after standing still the preceding year. He cites the example of a three-room apartment on Kibbutz Galuyot Street, which was recently sold for NIS 1.12 million, while a similar apartment on the same street was sold a year ago for NIS 1.07 million. According to Peretz, young couples prefer to buy an apartment in a Tama 38 building with a security room, which are much cheaper than new apartments. For example, new four-room apartments in Neighborhood 12 are being sold for NIS 1.85 million, while apartments in a Tama 38 project in Neighborhood 8 and Neighborhood 9 are being sold for NIS 1.35 million. The differences for three-room apartments are NIS 1.65 million, compared with NIS 1.12 million. Peretz says that the security situation makes no difference. "People have gotten used to it. During Operation Protective Edge, there was more work. It didn't bother people."
Revital Levi and Avi Dreishpoon from Nadlan Rishon also believe that the general trend is stagnation, and that the price rises halted a year or 18 months ago. "In the old areas in Rishon Lezion, there is more demand than supply, so there are slight increases in price. There is a shortage of four-room apartments with a balcony and a security room, so there is demand for such apartments being built in the Tama 38 plan. The difference in price between apartments in Tama 38 projects and apartments in new projects is 15%, and people are willing to make the effort.
"In western Rishon Lezion, on the other hand, we see that it takes a lot longer to sell, because people are asking insane prices, maybe because they have gotten used to a bull market. It takes a long time to sell an apartment, and a lot of buyers come to see it. Today, it's a buyers' market. Buyers are checking everything happening in the market, and apartments are staying in the market for a long time. Someone who wants to sell is lowering the price."
Yigal Roda from El Haneches in Kiryat Ono says that housing prices have risen by 6-9% in Ganei Tikva in the past year, mainly for four-room apartments. According to him, the increases are related to construction of a high school and the fact that the town is about to receive the status of a city. The change is in secondhand apartments that are several years old, not in apartments sold by contractors. For example, late last year, a four-room apartment with two adjacent parking spaces and a storage room sold for NIS 2.39 million, and a similar apartment was sold in the past two months on the same street, but with one elevated parking space and one underground parking space, for NIS 2.58 million.
Published by Globes, Israel business news - en.globes.co.il - on December 22, 2019
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