Yonatan Katz (photo by Zvika Dor, shutterstock, Flash 90)
The chief economist of Leader Capital Markets, Yonatan Katz, one of Israel’s top economists, warns today against a further increase in apartment prices and price pressure on rent. Katz points out the pressure of the banking system on the contractors which will reflect negatively on the number of construction starts in the coming period as well as on a significant increase in the number of new immigrants which pressures up the rent prices.
“In the third quarter of this year, the number of construction starts decreased to 67.6 thousand units on an annual basis, and the number of construction completions decreased to 49.5 thousand. According to the decrease in the number of construction starts and completions, housing prices will continue to rise in 2023, despite the record number of housing units under active construction 164.6 ( Thousand)”. says Katz.
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“It is very strange,” he adds, “that we still do not see a real increase in the number of construction completions. In addition, it is worth paying attention to the sharp decrease in the number of construction starts (of 8% in the third quarter of the year). Undoubtedly, monetary restraint makes it very difficult for contractors and increases the risk.
“In the fourth quarter of this year, a further decrease in construction starts is likely to be assumed, a trend that will limit the supply of apartments in the future. Another figure was published last week: in 2022, 70,000 immigrants arrived in Israel, more than double compared to previous years. This means: pressure to increase rental prices in a market with inventory Relatively low” he concludes.
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