Industry Expert: Expect Home Prices to Jump if Government Falls

YERUSHALAYIM -
Construction work on new homes outside Afula. (Nati Shohat/Flash90)

Home prices fell in the months of August and September by 0.1 percent over their level in the previous two months, the Central Bureau of Statistics (CBS) said – but according to real estate experts, that dip will quickly reverse itself if early elections are called.

In an interview with TheMarker, Nir Shmul, head of the Shmul real estate organization, believes that the resignation of Avigdor Liberman as defense minister and the eventual calling of early elections will lead to an increase in the cost of housing.

Prices of homes have been going down in recent months, and over the past year, the CBS said, they have dropped at least 1.9 percent. More importantly, sales of homes have slumped, falling by some 22 percent since September 2017.

But with the current government set to break up, that could quickly change, said Shmul. “History is repeating itself, and we can expect that the price of homes will climb by as much as 20 percent in the coming months, exactly as they did four years ago.” At the end of the last government, the vaunted plan to lower real estate prices – the Zero VAT plan of former Finance Minister Yair Lapid – came to an end as well, and the pent-up demand that was released as buyers who had stayed away from the market in the hopes of getting a discounted apartment caused a jump in housing prices.

Now, with the current government set to fall, the plan by which Finance Minister Moshe Kahlon hoped to lower housing prices – the Price Resident plan, which set below-market prices on apartments for eligible buyers – will also come to an end, again releasing pent-up demand that will drive prices up, Shmul said.

“I would suggest that anyone looking to buy do so now, and not wait until prices have risen. There is a very limited quantity of homes for sale, far fewer in fact than there were when Yair Lapid finished his term as finance minister,” he added.