After a decade and a half of consecutive price increases, the contractors got used to the fact that there is only one direction for real estate prices. But the data already shows that there is a slowdown – in the number of transactions, in the scope of mortgages, in the size of the average mortgage (a decrease of NIS 50,000 per month), and also in apartment prices – which is actually The most interesting statistic of all. The Central Bank stated that there is a 2.4% decrease in new apartments, this seems like the first sign, in the next reports of the Central Bank, the decrease is expected to be inclusive, not just new apartments. We mentioned the delay in the data, the months November-December more They were not reported and they were “bombarded” with promotions-gifts and also discounts – this will affect the prices.
The declines will continue, but they are only a price correction, after the crazy surge of the last few years (20% in the last year, 37% during the last 5 years – here are the figures)
The contractors are under pressure. They try to broadcast business as usual, but the flood of reactions from “contractors and the gang” every time the Bank of Israel raised the interest rate, or data was published about a decrease in the volume of sales in the apartment market was amazing – they said ‘prices will not decrease’. They claimed that the Bank of Israel raises interest rates and only hurts the public, but does not stop inflation. Then they said that only the real estate transactions are going down but that will not stop the housing prices, then they moved on to the Gwaald calls and called on the Bank of Israel to immediately stop raising interest rates.
And what do the contractors say now? They are trying to tell you that now the housing price increase has indeed stopped, but only because of the interest rate and that it will not last, and that this is not a good reason for the price stop. That is – these are ‘not the right reasons’ and therefore according to them it is only a temporary stop before the next flight at the prices. Once interest rates go down again, prices will go up.
Why do we say that? Because just like in the capital market – no one is really an expert. Real estate prices soared for 15 years because the interest rate in the economy was zero (and of course also because of a real reason – the lack of apartments). But the contractors have an interest in keeping the prices up. Are they able to deal with a situation of falling prices? Most of them are, the question is to what extent The drop will be deep. Did they prepare for such a day or did they take advantage to buy land with the assumption that prices will continue to soar? There is and there is.
The next problem for the housing market could be the bankruptcies of contractors, after they took way too much leverage, for too long, and got used to zero interest rates, which probably won’t come back anytime soon. It happens in the small ones as well as in the medium ones and approaches the big ones. Some companies already see their difficulty in the reports and also in the prices of the stocks and bonds – Hanan Mor in a dangerous spiral – the accountants will press to delete the land in Sde Dov; The deletion will damage the financial conditions and the risk in the bonds will increase. However, the big companies meanwhile have a lot of cash as a result of the past fundraisings. There does not appear to be an imminent cash flow problem, there is no great pressure, but they also feel the need to return to a reasonable sales level. These companies sell less, produce less cash, and despite their financial capabilities, they are leveraged, they pay high interest, and on the other hand, they do not have the receipts they were used to from the customers-buyers of the apartments. They have time, each case on its own merits, but there is a high probability that you will not hear of a large contractor entering into distress in the coming quarter. For the small ones, it is can definitely happen.
The longer the potential buyers wait and do not enter with the first declines in the apartment market, the stronger the pressure on the contractors will be, the longer the prices will fall. It all depends on the patience of the buyers, not sure they have it.
In the meantime, here are real estate transactions from the past week:
Kfar Saba
5-room apartment, street 130 square meters, floor 3 out of 6, parking, elevator, sold for NIS 2,800,000
4-room duplex, Mor Street, the old Hadrim neighborhood, 100 square meters, 18 square meters balcony, 2nd floor of 2, parking, sold for NIS 2,250,000
5-room apartment, Weinberg Street, the green neighborhood, 125 square meters, 12 square meters balcony, 3rd floor out of 7, parking, elevator, sold for NIS 4,370,000
Netanya
4-room apartment, on Mota Gor street, 96 square meters + 10 square meters balcony, 7th floor out of 9 sold for NIS 3 million
4-room apartment, on Ehud Manor Street, 136 square meters + 24 square meters balcony, 4th floor out of 33, with 4 elevators, 2 parking spaces, gym, tenants’ room, pool, synagogue in a luxury project. Sold for NIS 7.2 million.
Hadera
3-room apartment, Rambam Street, 75 square meters, floor 1 of 5, sold for NIS 1,240,000
3-room apartment, Yitzhak Rabin Street, 81 square meters, 2nd floor out of 6, parking, elevator, sold for NIS 1,190,000
3-room apartment, Nahal Perat Street, 75 square meters, 4th floor out of 12, parking, elevator, sold for NIS 1,865,000
Beer Sheva
2-room apartment, Uziel Street, neighborhood 14, 100 square meters, 4th floor out of 4, sold for NIS 860,000
4-room apartment, Eliyahu Hanavi Street, neighborhood D, 75 square meters, 3rd floor out of 4, sold for NIS 760,000
3-room apartment, Meshaul Dorvan street, neighborhood 5, floor 1 of 1, sold for NIS 865,000
5-room cottage, Doivovitz Street, Ramot neighborhood, 147 square meters, built on a 240 square meter lot, parking, sold for NIS 2,045,000
4-room apartment, Jericho Street, neighborhood 9, 110 square meters, floor 8 out of 8, parking, elevator, sold for NIS 1,000,0000
onyx
7-room villa, Tarshish Street, Alonim neighborhood, 300 square meters built, 580 square meters lot, parking, sold for NIS 7,400,000
5-room villa, Zoran Street, Rakfat neighborhood, 329 square meters built, 372 square meters lot, parking, sold for NIS 6,600,000
earing
4-room apartment, Shoham Street, 102 square meters, 12 square meters balcony, 4th floor out of 5, parking, elevator, sold for NIS 1,675,000
4-room penthouse, Rimon Street, 112 square meters, balcony 56 square meters, floor 4 out of 4, parking, elevator, sold for NIS 1,820,000
5-room apartment, Turquoise Street, 117 square meters, balcony 16 square meters, floor 3 out of 5, parking, elevator, sold for NIS 1,655,000
Kiryat Hayim
5-room triplex corner cottage, Rishonim Street, Kiryat Haim HaMizrachit, 150 square meters on 3 levels, parking, sold for NIS 1,810,000
Kiryat Motzkin
1.5 room apartment, Goshen Street, 28 square meters, 7 square meters balcony, 1st floor of 2, sold for NIS 590,000
The data was collected from Rimex, Anglo Saxon and the Tax Authority.