Mortgage (vecteezy photo)
The boiling real estate market continues to provide sharp price increases and demand that does not satisfy supply. Along with a record number of transactions made in the past year – 151,000, it is important to note the significant change in demand for small apartments among the Israeli public. On the order of up to 2 rooms, it increased significantly – 43% compared to 2020. In addition, apartments on the order of 2.5-3 rooms, increased by 25%.
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This is a real revolution in the housing market, after many years, 5-6 room apartments were the first in the priorities of the Israeli public – and by a large margin. And what are the reasons? Naturally the first of which concerns the rise in prices and the obligation to compromise on the size of the apartment, but not only. Another reason concerns the reduction of the purchase tax, which is intended to cool the demand among investors, or alternatively investors who rushed to purchase an apartment for investment for fear of a further jump in prices.
According to the data, in 2017 about 38% of the apartments purchased were of 4 rooms, compared to a decrease in 2020 to about 35%. At the same time, in 2019 the large apartments crossed the 30% threshold and in 2020 there was a further increase to more than 31%. During all that time, the small apartments of up to 3 rooms maintained stability in terms of their share in the entire market and accounted for about a third of it.
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In 2021, the change took place. The public stormed the small apartments, leading to a situation where the weight of all purchases exceeded that of the 4-room apartments. In the free market, and especially with regard to young couples, the options ranged from taking a higher mortgage on the apartment to reducing the size of the apartment they planned to purchase.
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