Apartment prices are not expected to fall in the near future, according to the Bank of Israel’s Financial Stability Report for the second half of 2021, published today (Monday). According to the bank’s economists, the corona crisis caused a slowdown in land marketing by the Israel Land Authority (RMI) in 2020, which will affect the supply of new apartments in the coming years, despite the acceleration that took place in 2021. It is also written that 2020 Until the formation of the new government and the approval of the budget, there has recently been a sharp rise in land prices in RMI tenders, even in areas that are not considered areas of demand. The rise in land prices may be reflected in the rise in housing prices in the future.
The Bank of Israel is also pessimistic about rental prices for residential apartments, saying that housing prices in Israel rose during the corona crisis at a higher rate than the rise in rental prices, so the market is expected to adjust and rental prices are also expected to rise.
The impact of the crisis on supply in the short term was relatively small, given the deviation of the construction industry from the restrictions of closures, and was reflected in a minor decrease of only 3.1% in construction starts in 2020 compared to 2019. CBS data for the first three quarters of 2021 indicate a 5.4% increase in construction starts compared to the same period in 2020; the annual rate is about 1.56 thousand housing units, and it may even be updated upwards, as the rate of issuance of building permits was higher The crisis caused the length of construction to increase by an average of two months in 2020 compared to 2019, and as a result the extent of construction completion in 2020 was 8.5% lower than in the previous one; this phenomenon will continue in 2021 as well.