Don’t expect housing prices to fall anytime soon, said Chief State Appraiser Tal Aldrotti at a real estate conference last week. “If you want to know whether or not prices fell in 2017, ask me in 2018,” he said at the Real Estate City conference in Tel Aviv. “Anyone standing with a stopwatch and expecting prices to begin falling on a certain date is fooling himself.”
Recent numbers released by the Israel Real Estate Appraisers Association, a private organization, do not bode well for homebuyers seeking a bargain. The report said that home prices in 2016 climbed 9 percent. In many popular communities, the increase in home prices was even greater. The report is the only current source of information about the state of housing prices, as Finance Minister Moshe Kachlon several months ago ordered Aldrotti not to release any more reports about home prices, claiming that they were inaccurate and just prompted more “price frothiness” in the market.
One upshot of the report, said the group, is that the much-heralded Price Resident program to lower real estate prices for young couples is far less effective than Kachlon believes. Indeed, there have been numerous reports that the program is not all that it appears to be; one recent report said that one third of eligible buyers under the discount program decide in the end to withdraw from the program, because even with the discount offered by contractors on apartments, they are still too expensive for many young couples.
In fact, according to Eliav Ben-Shimon, chairman of the National Builders Association, the Price Resident program is one of the main reasons for the increase in housing prices. “The program is not the right solution for our housing situation,” he said at the conference. The Price Resident program is not very extensive, and many of those who are eligible in the end decide not to buy through the program, which they feel does not supply as much of a discount as they had hoped, but imposes many limitations on selling an apartment purchased through the program.
In addition, there have been numerous Price Resident projects – where contractors promise to allocate a certain number of homes for low-cost construction to eligible young couples in exchange for government approval of their projects – which have failed altogether. In a recent tender in Beit Shemesh, for example, not one contractor could be persuaded to build a Price Resident project.
According to analysts, the reason for the failure was that investors who have been pumping money into the real estate market, absent any other useful investment vehicle, have not given up on real estate. The lesson, said the analysts, was that anyone who has been waiting out the high prices before buying a home in Israel still has some time – probably a lengthy amount – before prices start falling.