By: Adir Keinan, real estate developer and owner of ‘Kach Real Estate Urban Renewal’
In the last month, it seems, they stopped talking (well, did not stop, but reduced the talk) about apartment prices and moved on to a comprehensive survey of the jump in rental prices – especially in Tel Aviv.
So first of all, let’s face it. The main reason is that reporters and journalists living in Tel Aviv and its environs do not have the capital to live in an apartment owned by them in the most expensive city in the world and so they live in rent, so the issue is just closer to their hearts and burning in them.
And why now?
So this morning, Shira Greenberg, the chief economist at the Ministry of Finance, published the quarterly real estate report, which shows that in the first quarter of 2022 there was a sharp decrease of 23% in the number of real estate transactions compared to the previous quarter, and it should be remembered that the first quarter of the year was The first full after raising the purchase tax on investors in late November. boom!
Yes, in the report Greenberg writes that there has been a 60% (!) Decrease in investor purchases compared to the corresponding quarter
So what’s the wonder?
Investors do not buy a second, or third, home so that they have somewhere to raise cats or vacation in the summer. The investment apartments are used by the rental market, and when investors move away, not to mention forcibly, from the market – then the supply of rental apartments is small, and the remaining investors also feel the need to compensate for the additional tax costs and do so in the form of price increases.
And for renters, there are not many choices – but to pay.
So what did we have?
An artificial attempt on the part of the government to combat price increases by dealing with the demand side, and as a result harming the weaker populations, but they have even fewer choices – the populations of tenants and young people.
I will say again – the solution to the housing problem in Israel is one: increase supply – release barriers and bring to the market about 100,000 apartments a year, at least for the next decade. Everything else is just a band-aid.