After the initial shock experienced by the general lockdown that began in March 2020, the economy saw layoffs and the sending of workers to sick leave on an unprecedented scale, as well as the mass collapse of small and medium-sized businesses. The number of transactions plummeted, but 11 cities were virtually unaffected
After the initial shock experienced by the general lockdown that began in March 2020, the economy saw layoffs and the sending of workers to sick leave on an unprecedented scale, as well as the mass collapse of small and medium-sized businesses. Accordingly, the first wave of the Corona epidemic had a severe impact on the real estate market in Israel, when the number of transactions in the industry dropped sharply. Yet, Examining a survey conducted by the Globes website In 11 cities in Israel, indicates a slight decrease of only about 1% in housing prices in Israel as a result of the first wave. The gap between the low number of transactions and the moderate drop in housing prices indicates the public's confidence in the industry, and seemingly instills optimism regarding the local real estate market.
How did the corona virus affect real estate and housing prices in Israel?
The effect of the corona crisis on the real estate industry in Israel is closely related to the effect of the epidemic on the Israeli economy as a whole. After the initial market experienced by the general lockdown that began in March 2020, the economy saw layoffs and the sending of workers to sick leave in an unprecedented scale, as well as a mass collapse of small and medium-sized businesses.
Accordingly, the first wave of the Corona epidemic had a severe impact on the real estate market in Israel, when the number of transactions in the industry dropped sharply. Yet, Examining a survey conducted by the Globes website In 11 cities in Israel, indicates a slight decrease of only about 1% in housing prices in Israel as a result of the first wave. The gap between the low number of transactions and the moderate drop in housing prices indicates the public's confidence in the industry, and seemingly instills optimism regarding the local real estate market.
The connection between the corona epidemic and housing prices is a question mark today, while we are in the midst of the second wave, and expect another outbreak of a third wave during the winter. However, expert forecasts provide us with a certain understanding of the expected trend in housing prices in Israel.
According to estimates, the slight drop in housing prices is a result of the first and second wave Not expected to last long. The main concern is precisely from the paralyzing effect of a continuous and consistent decrease in the number of real estate transactions, at the same time as a temporary decrease in the supply of apartments due to Delays of works in the construction industry. At the same time, experts point out that a drop in the volume of real estate transactions is typical of situations characterized by extreme uncertainty, such as the one that prevails during the Corona period.
What changes are expected to occur in the local market in the coming year?
There are quite a few opposing opinions among real estate experts. In the short term we are already beginning to feel a certain rate of price drop, but since there is no real change in demand and the supply is not increasing (and probably even small) most experts predict that In the long term, prices are expected to continue to rise.
According to some forecasts, a 6% increase in housing prices is expected in 2021 from the second quarter of 2020. The increase in prices is expected to reflect a deviation of no less than 21% from the multi-year trend line. This means that housing prices are climbing at a much higher rate than the rate that characterizes the increase in the average standard of living in the country, which may lead to disparities in the purchasing power of the public.
What will happen to the rent?
Since the outbreak of the epidemic, more and more cases of tenants who have been fired or who have fallen into financial distress due to the crisis and are unable to meet the monthly rent payments have been published. However, contrary to expectations, so far there have been no significant decreases in rent in most of the country's settlements and from a review recently published by the Ministry of Housing It appears that in some areas there was even a certain increase in the months of August and September 2020, as well as a real increase in the rent in Israel at a rate of 2.3% on an annual basis.
What is the future?
Some experts predict a prolonged stagnation of at least a few months in the scope of real estate transactions, due to the expectation of the not-short recovery period needed for the entire economy. The estimates are that the meteoric rise in the unemployment rate and the number of the unemployed And the severe damage to small and medium-sized businesses due to the closures will harm the purchasing power of consumers, thus making it difficult for them to purchase properties. This concern is intensified in light of the data showing that The age group whose employment has been hit the hardest is young people aged 24-34, who even before the Corona crisis had difficulty buying an apartment.
At the same time, and in spite of everything, most experts do not foresee a significant drop or low in the prices of real estate and housing in Israel, but rather the trend of rising prices in the real estate market in the long term. Based on past data from previous crises, the estimates are that the current corona crisis will result in only a short-term decrease in housing prices, while the general trend of price increases is not expected to change in the longer term.
In order to try and explain this prediction, you can look at the SARS epidemic in Hong Kong as a case study. After the outbreak of the epidemic in 2003, Hong Kong imposed a strict lockdown of about four months. Studies conducted in his wake, found that despite the sharp increase in the unemployment rate in the country and the blow to the national GDP, housing prices were not affected in the long term.
However, it is important to note that the corona epidemic has a different character than its predecessors. This is a global crisis that may have long-lasting and unprecedented consequences for all the countries of the world. If the crisis continues for a long period of a year or more, there may be a price drop in the real estate market even in the medium term. But as mentioned, if it is indeed a matter that will end in less than 12 months, with a return to normality and full activity of the economy, only a moderate slowdown is expected in the short term, which will be replaced by a gradual and cautious increase from next year onwards.
This article is promoted content in collaboration with the Master Real Estate website.
For comprehensive analyses, information and other relevant real estate guides for buyers and investors, visit the Real Estate Master website: https://www.nadlanmaster.co.il/
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Every project that is marketed on the free market shows that there are apartments for sale, how would you explain that?
At the price per resident, the apartments in the center of the country are snapped up like hot cakes, but in areas like Ashkelon, Beer Sheva and more, people cancel their winnings. I don't understand how young couples with 100 or 200 thousand NIS can buy an apartment where they want to live, with employment of course. It is a fact that the suburbs are flooded with apartments for sale and rent and the employment there is minimal with salaries that cannot support a household in a respectable way.
I assume that there will be an "increase" in prices in the near future, and later there will be a decrease.
Really the real economy?
Are you publishing an article with marketing content that encourages people to make irresponsible financial decisions?
What's wrong with you, you are supposed to be the mouthpiece that warns people and brings to their attention that what happens in the press/politics does not always reflect the real situation, and now you are pushing us a real estate pimp article that advocates exactly what you have been trying to expose in recent years. Just a bad point "for your benefit".
After an article like this - how can you be trusted to represent the other side of the economy.
The supply of apartments in Israel is huge, there is no shortage, so the contractors are tying up with 170,000 apartments. Apartment prices in Israel have been on a downward trend for at least two years, since before the corona virus because people ran out of money to buy.
Soon the mortgage deferment is over, and then the celebration will begin.
I call on everyone who enters this article - right now is not the time to invest in real estate!!!
Who are the "experts"? Do you see stars in the stars? When the percentage of the unemployed increases from 6-8% to 20-30%, how is it possible for apartment prices to rise? When a large part of the Jews in Europe who bought apartments for investment see their businesses collapse, will they continue to buy apartments? Young unemployed couples will move into a room with their parents or if they have some savings they will rent an apartment in the suburbs because there is no longer the consideration of spending an hour commuting to work in any direction.
So the question is: when will full employment return? It seems that there will be a heavy recession until the end of 2021 and only then will recovery begin. But in the meantime, small and large businesses will collapse, only the particularly strong will survive. The structure of the economy will change - fewer businesses each providing more services. There is an advantage to size here, less people are employed. So a certain percentage of job seekers will not find. Recovery will be excruciatingly slow.
Hence: when will the demand for housing start to grow??