New data recently published by the Central Bureau of Statistics has deflated some of the arguments that various parties have been pumping up for years, including the myth that, "in Israel, housing prices have never fallen."
According to the Central Bureau of Statistics data, home prices have certainly fallen. "In 2000-2006, home prices fell by 12.4%, and in 2007-12, they rose by 71.9%," it states. So while the surge in home prices since 2007 has caused the preceding drop in prices to evaporate, it means that prices have fallen before and they could fall again.
Another common argument in the real estate industry, especially among marketers of apartments, is that Israelis want to own their own homes. Although renting is very common in other countries, the experts say that in Israel, the proportion of people living in rented homes will never grow substantially, and that there has never been a large proportion of renters.
In that the case? The Central Bureau of Statistics data again show a somewhat different reality: "In the 1950s, most households (57%) lived in rented apartments, and only 43% of households lived in their own homes. From the mid-1950s through the mid-1970s, the proportion of households living in their own homes rose substantially to reach 71% of households living in their own homes in the mid-1970s. Since then, there has been almost no change in the proportion of households living in their own homes."
The meteoric rise in home prices in recent years has eliminated any chance of a fall in prices that will restore the previous situation, or anything close to it. Even if prices fall, extreme scenarios talk about a drop of 25%. As for resident-owned homes, Minister of Finance Yair Lapid's plan to build 150,000 rental apartments may change the balance of forces between rent and ownership, but the plan has to be implemented for this to happen. Meanwhile, thousands of people rent apartments in illegal buildings or live with their parents, and to reach a genuine equilibrium, genuine data are needed.
Published by Globes [online], Israel business news - www.globes-online.com - on October 21, 2013
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