Despite renewed calls by the social protest for affordable housing and to lower the cost of living, Israelis are prepared to pay more for homes than they were six months ago.
The latest biannual survey by "Globes", and Bauman-Ber-Rivnay Saatchi and Saatchi unit Azimuth Advertising, together with Mutagim Research Ltd., found that the average maximum price Israelis are willing to pay for a home rose 16% to NIS 1.14 million in June 2012 from NIS 979,000 in December 2011. The December 2011 figure was the lowest figure in three years, and the first time since June 2009 that the average maximum price Israelis were willing to pay for a home fell below NIS 1 million. That did not last long.
Azimuth Advertising CEO Benny Keret said that buyers' willingness to pay more for homes was mainly due to disappointment from the social protest. "The results of the current survey highlight the conceptual change among homebuyers, which has been affected by several factors, including the failure of last summer's social protest and the realization that home prices will not come down," he says. "The rise in the cost of living in every area and the continuing economic crisis in Europe also contributed to the wising up."
Keret estimates that the average maximum home price in the previous survey -NIS 979,000 - mostly reflected expectations that home prices would fall as a result of the social protest. "Now, six months later, it seems that the public realizes that not only won't prices fall, but that they have begun to rise." He adds, "The perceived rise in prices show a return to stabilization in market prices and the public's realization that prices will continue to rise."
Keret says that the average maximum home price in the current survey - NIS 1.14 million - is almost the same as in late 2009 and early 2010, but is still 9% less than the peak price of NIS 1.25 million in mid-2011.
The average home price was NIS 1.09 million at the end of March 2012, according to the Central Bureau of Statistics, suggesting that Israelis' expectations are realistic.
The June 2012 survey also found that 53% of Israelis are prepared to spend more than NIS 1 million on a home, and that 47% are willing to spend more than this. However, only 11% of respondents were willing to spend NIS 1.7 million to NIS 5 million, the highest price in the survey.
Central Bureau of Statistics home prices figures for the first quarter state that only the following kinds of second-hand homes cost less than NIS 1 million: 1.5-two- room apartments in the Jerusalem and Tel Aviv districts; three-room or smaller apartments in the Central and Haifa districts; and four-room or smaller apartments in the Northern and Southern districts. The average price of a 1.5-two-room apartment was NIS 1.3 million in the Tel Aviv District.
The survey found that the number of home-seekers fell in the first half of 2012, partly because investors quit the real estate market. 5% of respondents said that they were looking to buy an apartment and another 4% said that they were considering looking for an apartment, 9% altogether, down from 10% and 12%, respectively, in the two previous surveys. "The current survey indicates that we've returned to normal demand, similar to the levels of 2007," says Keret.
Mutagim Research CEO Avi Peer said, "The decline in the number of people who say that they are looking for a home since the mid-2011 is continuing, after a rise in the previous 12 months from June 2010. The current drop in home-seekers includes both new and second-hand homes, indicating a relative stabilization of perceptions over the past year."
The Central Bureau of Statistics reports that demand for new homes fell 10% in May, compared with April.
21% of the respondents who said that they were actively seeking to buy a home or considering buying a home, said that they wanted a new apartment, 54% said that they were looking for a second-hand apartment, and 25% said that they were look at both, or had not yet decided.
The "Globes"-Azimuth Advertising survey polled 508 adults in the Jewish sector. The survey has been conducted for six years.
Published by Globes [online], Israel business news - www.globes-online.com - on July 8, 2012
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