Israel's luxury housing market is showing more signs of distress. A survey published by Levy Yitzhak, a leading Israeli real estate appraiser, indicates that owners of luxury properties realized in the past year that they would have to compromise on price in order to close deals. According to the survey, the total number of deals involving luxury properties show a decline of 15% or more between February 2018 and February 2019.
The survey includes segmenting according to regions of 3-5-room apartments. Despite the significant variance between the luxury market and "ordinary" properties, the findings show that the same mood in the market towards luxury properties, meaning large apartments.
For example, in comparing deals in February 2019 to deals in February 2018 for five-room apartments in Tel Aviv, the average price for a five-room apartment fell from NIS 4.68 million in February 2018 to NIS 4.1 million in February 2019, a 12% drop. "The price of apartments with five or more rooms are falling steeply. Prices of special apartments, duplexes, and penthouses are in freefall, with falls of 15% and even more," Yitzhak said.
Prices are also tumbling in Herzliya, according to Yitzhak's figures, with an 11% drop in prices of five-room apartments and the average closing price in in February 2019 being NIS 2.75 million. Prices of five-room apartments in Jerusalem and Beer Sheva fell 9% and 7% in the same period, reaching NIS 2.5 million and NIS 1.3 million, respectively. In Rishon Lezion, however, the price of five-room apartments were up 2% to NIS 2.28 million during this period.
Yitzhak's survey also included three and four-room apartments, but the trend varied between different cities. For example, prices of three-room apartments Jerusalem climbed 14% during this period, in contrast to five-room apartments. In Beer Sheva and Rishon Lezion, on the other hand, prices fell for all types of properties. For example, the average price of a three-room apartment in Beer Sheva fell 3% to NIS 670,000, and four-room apartments went down 5% to NIS 950,000. Yitzhak says that real estate in the city was affected by the exit from the market by investors, and also cited the apartments included in the Buyer Fixed Price Plan as a factor.
The price decreases in Herzliya were even greater. Prices of three-room apartments in the city dropped 12% to NIS 1.65 million, while prices of four-room apartments slid 10% to NIS 2.15 million. In an attempt to explain the what happened in Herzliya, while prices in attractive places in the central region, such as Ramat Gan and Givatayim, were almost unchanged in all categories, the survey states, "The absence of foreign investors and residents greatly affects Herzliya. Both the number of deals and apartment prices declined very steeply. Move-up buyers are making deals, but are finding it difficult to bridge the difference between the apartments being sold and the new apartments being offered for sale."
Published by Globes, Israel business news - en.globes.co.il - on March 10, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019