Rating Agency Predicts Fall in Housing Prices

A construction site in Efrat, September 29. (Gershon Elinson/Flash90)

Israelis can look forward to a dramatic change in the housing market, according to Globes on Monday.

S&P Maalot was quoted as saying in a report obtained by the newspaper that “In our view, towards the end of the year there will be a steep drop in prices of up to 5%.”

This would be an upswing from Central Bureau of Statistics figures released on Thursday showing a 0.7% rise in home prices in Israel so far this year.

The trend is likely to be short-lived, however. The agency also said that “as far as 2021 is concerned, we see a rise in prices of 2%.”

S&P Maalot analysts Gil Avrahami and Yair Dyk commented in terms of short and medium: “In the short term, we estimate that negative pressure will be generated on home prices if market demand continues to shrink. In the medium term, however, given our expectation of a fall in supply of homes, among other things in the light of the slowdown emerging in issues of building permits and building starts, and the postponement of land sales, home prices are likely to rise.”

They also noted a toughening of financing terms, and developers’ hesitancy about starting new projects because of the prevailing economic uncertainty and the need to meet sales targets in order to receive bank finance.

Although construction has been designated a vital industry, and is therefore not subject to all the restrictions related to the coronavirus pandemic, it has been affected by restrictions on entry into Israel by foreign and Palestinian workers, and by workers, site managers and supervisors having to self-isolate.