"Salespersons at building sites say that the main victims of the Bank of Israel's measures are young couples. They used to be able to secure very high financing, but they must now provide capital equal to 25% of an apartment's value, and this is a real hardship," Bank Hapoalim (TASE: POLI) construction and real estate manager department Carla Tzabargal told the Association of Banks in Israel's "Banking" magazine.
Tzabargal adds, "People seeking to buy bigger apartments also face difficulties, because they used to take bridge loans until they sold their current home, but these loans are now expensive. In contrast, investors usually have financial resources, and we can say that they have been affected less."
Tzabargal says, "If Operation Pillar of Defense failed to bring down housing prices, we won't see them fall any time soon. I think that a further rise in prices, or stability, is a possibility, but I don’t see prices falling.
"During the past two years, we believed that demand was inelastic for apartments costing up to NIS 1 million. The problem is that these apartments, which were once found in the second ring areas in central Israel, are now in the third and fourth rings, and apartments in the second ring now cost NIS 1.25 million."
As for the link between home prices in central Israel and the periphery, Tzabargal says, "We can see rent of NIS 6,500 for four-room apartments. Many people cannot afford this, and have to move farther away from metropolitan Tel Aviv. That is why prices will rise."
Published by Globes [online], Israel business news - www.globes-online.com - on February 5, 2013
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