The average price that Israelis are willing to pay for an apartment fell to a 30-month low, according to the latest biannual survey by "Globes", and Bauman-Ber-Rivnay Saatchi and Saatchi unit Azimuth Advertising, together with Mutagim Research Ltd. The average price that Israelis are willing to pay for an apartment fell 22% from NIS 1.25 million in June to 979,000 in December - a NIS 270,000 drop in six months - and the first time since June 2009 that the figure was below NIS 1 million.
In the wake of the summer's social protest, which was driven by the housing shortage and high cost of living, it appears that the price the public considers "realistic" for an apartment is falling, as demand wanes while potential buyers wait for prices to fall.
It is important to emphasize, however, that while the price that people are willing to pay for an apartment saw a double-digit fall within six months, actual prices have fallen only by single digits. The average price of an apartment fell 3% to NIS 1.08 million at the end of September from the end of June, and by 4% from the end of March, according to Central Bureau of Statistics figures.
Mutagim Research CEO Avi Peer said, "The maximum psychological price that buyers are willing to pay represents a drop in the conceptual price. Potential buyers have returned to the price levels last seen in the survey for June 2009. The figures mainly refer to the conceptual price and outlook for the future. In the next survey, we'll be able to see whether the market has reached a new equilibrium, and whether prices will remain at around NIS 980,000, or if we'll see a further drop in prices toward NIS 950,000."
Although Israelis have closed their wallets, the survey found barely any change in the public's plans to buy an apartment. In other words, the hand is clenched, the conceptual price has fallen, but the demand remains. 2% fewer Israelis said that they were planning to buy a home compared with the previous survey in June. 10.3% of respondents said that they were buying or considering buying an apartment in the next three months, down from 12.4% six months ago.
The survey also found that Israelis are seeking smaller apartments. "The sharp drop in prices buyers are willing to pay for an apartment also reflects a major change in the kind of apartment that is most in demand, which clearly shows the mire into which the real estate market has sunk," state the survey's authors.
7% of respondents said that they were looking for lofts or two-room apartments, the same proportion as six months ago and 5% more than a year earlier. Demand for three-room apartments more than doubled to 26% of respondents in December from 12% in June. Demand for four-room apartments rose to 61% of respondents in December from 50% in June and 44% a year ago.
However, demand for five-room apartments fell to 7% of respondents in December from 23% in June.
Published by Globes [online], Israel business news - www.globes-online.com - on December 28, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011