The civil year 2022 ends with a new government, with fears of a slowdown and recession, with a stock market that has fallen, with a rare spectacle of declines in both stocks and bonds and with – a jump in apartment prices. It is worth noting that by definition when stock markets fall, there is a shift of funds to purchase apartments. People They say, “Well, what’s the point of holding stocks and bonds when there are declines, we’ve earned enough in recent years, let’s cash in and buy an apartment.” It also happened in 2009 and it happened in 2022 as well.
This is one of the reasons for the 20% jump in apartments during 2022. And although this increase is often portrayed as a “negative” thing, in reality 70% of the readers of this article are probably overjoyed. This is great news for them – according to a calculation we made, they earned NIS 1 trillion as a result of the increase in the value of the apartments they own. This is a huge amount – 1,000 billion shekels and it comes from the following calculation – the number of apartments is about 2.8 million apartments (conservative number), average price per apartment is 1.9 million shekels (conservative), increase in value per year – 20% (CBS data).
This increase in value puts the losses in the stock market in the small pocket, and when you come down to the resolution of a family, you realize that despite the high cost of living, despite the claims that it is difficult to live here (and rightfully so of course), the people of Israel feel rich. A family from Mocha earned close to NIS 400,000 as a result of the increase in apartment prices. She feels richer, her financial security increases, she spends more, (because what’s the problem, we are worth more), she allows herself to take loans, credit because she has a high-value apartment, and more.
>> Apartment prices in Be’er Sheva
>> Apartment prices in Hadera
Consumption and growth prevent the rise in housing prices and even though it is on paper and there is no intention to realize it, this profit creates a sense of security and a sense of wealth that drives us – it is natural, it does not necessarily have to be this way, but if you were looking for a reason for those people who are able to live well even though it seems above To their credit, it could very well be thanks to new funding they take in as a result of this sense of wealth. It is easier to take financing if you have an apartment whose value has increased by NIS 400,000, who would argue about NIS 40,000 for a family trip for two weeks, when you earned NIS 400,000. Come on, you only live once.
Sometimes this feeling throws people off balance. Many families in Israel live beyond their means, far beyond their means. As soon as a family’s income is lower than its expenses – there is a current deficit. So you close with a loan and another loan, and roll over loans, only there are two problems – the interest on the loans has increased dramatically – both in mortgages and in general (on the average interest rate on loans in banks and credit card companies) and – is it possible to roll over debts to infinity? probably not.
The increase in apartment prices serves the government. If the government wanted to lower apartment prices, they could do so. The main reason why apartment prices are not falling is that the government as a whole (all governments of course, not just the last one) is not interested in a price drop. The feeling of wealth touches the public and it appreciates the governments for that. Besides, don’t forget that there are people in the government and in the Knesset with several apartments. We did not check in depth, but in a rough estimate, over half of the Knesset have more than one apartment.
So when the government and members of the Knesset talk about the duty to help young people, it is often not “true”. It’s just that the lack of consideration for young couples is destructive to the country. The young people are disappointed with the governments, disappointed with the cost of living and apartment prices, disappointed with the previous generations, they feel they have been worked over. They do everything they need to and fail to achieve some of their dreams, then they get resentful, then they become bad employees, then they choose to leave, then they live for the moment and damn what happens next. So instead of cunningly giving them – the option of an apartment on the assumption that it is a “lottery ticket for a lottery ticket”, they should be given a real solution, for most of them, not for 5% as in the government’s plan.
What will happen next?
It is clear to everyone that in recent months there has been a slowdown in prices and the beginning of a decline. These are reductions of up to 5% that often come through the back door – the contractor provides gifts, defers payments, pays you the mortgage in the first year. They call it sales, but these are discounts, and there is also a drop in the prices themselves. The reason is, of course, the contractors’ need to improve the volume of transactions against the background of the decline in sales in recent months. Small and medium contractors need the flow. Beyond that, the purchasing power of the public decreased. The increase in apartment prices has brought the prices to those that are not possible for many. The increase in the mortgage raised the repayment to a situation that is also not possible for many. In fact, the increase in prices and interest caused the mortgage repayment on the same apartment to rise from NIS 2,800 a year ago to NIS 5,000 now. This figure also embodies the increase in interest rates and especially the increase in apartment prices which forces the buyers to take out a larger mortgage.
And against this background, the prices calm down and go down, but the question is what will happen beyond the months. The contractors are reducing the pace of work in the projects, lowering the construction starts and thus basically making sure that there will be a shortage. A market in shortage is a market where prices rise. So even if now there are decreases, what is important is that the state frees up land and starts building, otherwise, prices may still rise again.
And here are real estate transactions from the last week:
Beer Sheva
– 3-room apartment, Eliezer Ben Yehuda Street, neighborhood B, 93 square meters, floor 1 of 3, sold for 1,100,000 NIS
– 3-room apartment, Mefez Yoav St., neighborhood 6, 75 square meters, 3rd floor out of 3, sold for 610,000 NIS
– 3-room apartment, Talmud Street, neighborhood D, 64 square meters, 2nd floor out of 3, sold for 525,000 NIS
– 3-room apartment, Bar Nissan Street, Neve Ze’ev neighborhood, 104 square meters, 2nd floor out of 8, parking, elevator, sold for 1,150,000 NIS
3-room apartment, Megiddo Street, 9th neighborhood, 71 square meters, 3rd floor out of 4, sold for 699,000 NIS
– 3-room apartment, on Yosef Ben Matatihu Street, 60 square meters, 1st floor out of 3, no elevator, no parking, sold for NIS 750,000
earing
– 3-room apartment, Rimon Street, 78 square meters, 16 square meters balcony, 3rd floor out of 4, parking, elevator, sold for 1,330,000 NIS
Yavne
– 6-room duplex penthouse, Herzl Street, the new Naot Shamir neighborhood, 162 square meters, 102 square meters balcony, 6th floor out of 6, parking, elevator, sold for 4,040,000 NIS
Kfar Saba
– 4-room garden apartment, Rupin Street, Rashonim neighborhood, 100 square meters, garden 127 square meters, ground floor out of 5, parking, elevator, sold for 3,500,000 NIS
Nahariya
– 3-room apartment, Sheprincek Street, 75 square meters, floor 5 out of 8, elevator, sold for NIS 955,000
– 4-room garden apartment, Etrog Street, 125 square meters, garden 80 square meters, ground floor out of 2, sold for NIS 2,020,000
– 4-room apartment, Zamir Street, 110 square meters, floor 3 out of 4, parking, elevator, sold for 1,170,000 NIS
Kiryat Motzkin
– 4-room apartment, Arava Street, 103 square meters, 10 square meters balcony, 4th floor out of 9, parking, elevator, sold for 1,640,000 NIS
– 5-room duplex, Weitzman Street, 127 square meters, 20 square meters balcony, 3rd floor out of 3, sold for 1,350,000 NIS
Afula
– 5-room apartment, Menachem Begin Street, 120 square meters, 2nd floor out of 7, parking, sold for 1,235,000 NIS
– 4-room apartment, Yehoshua Hankin Street, 102 square meters, 1st floor out of 3, parking, sold for NIS 850,000
– 5-room apartment, Mishmar Jordan street, 180 square meters, 3rd floor out of 8, parking, sold for 1,080,000 NIS
Hadera
– 3-room apartment on Har Shlomo Street in Or Akiva, 107 square meters built + 12 square meters balcony, 6th floor out of 14 with elevator, parking, attached warehouse, sold for NIS 1.8 million
– 2-room apartment on Herbert Samuel Street in the city center, 70 square meters, 4th floor out of 4, without elevator and without parking, sold for NIS 1.08 million
Herzliya
– 4-room apartment on David Elroy Street, 100 square meters + 12 square meters of balcony, 7th floor out of 15, warehouse, with elevator, 2 parking spaces, sold for NIS 3.55 million
Pardes Hana
– 5-room garden apartment on Neta Street, 140 square meters + 70 square meters garden, ground floor out of 4, 2 parking spaces. Sold for NIS 3.23 million
The data was collected from Rimex, Anglo Saxon and the Tax Authority data.