BDO: Housing prices won't fall in 2019

Shahar Ziv photo: Eyal Izhar

We see a slide in housing starts, and we therefore believe that housing prices will not fall in 2019," BDO managing partner Shahar Ziv said.

BDO managing partner Shahar Ziv presented the firm's analysis of the real estate market and gave an investment recommendation for businesspeople. "I chose to put things into perspective today. We are considering housing starts in Israel and the population increase. We see a slide in housing starts, and we therefore believe that housing prices will not fall in 2019," he stated.

According to the figures presented by Ziv, it currently requires 144 monthly salaries to purchase a home on the average, compared with 88 monthly salaries in 2001. At the same time, the number of housing starts has fallen in recent years, reaching 47,000 in 2018, while road congestion is increasing. The figures show that the ratio between mileage to paved surface has risen 30% since 2001, despite accelerated road construction in recent years.

Ziv also analyzed the main economic developments in recent decades: the recession that accompanied the second intifada and the subprime crisis on global markets late in the preceding decade. The encouragement for investors after the intifada through low interest rates following the financial crisis caused an increase in real estate purchases for investment. Combined with the low supply, the result was a rise in housing prices.

"Our main insights," Ziv said, "are that the solution for the housing crises lies in the supply. The demand does not have much effect. The fundamental solution is the supply of available land. In addition, there is no real constraint on land and buildings rights." Ziv said that the supply of privately owned land was in "full competition," but that there was a problem in the government supply. Ziv recommends improving transportation, developing a rapid transit network, and making housing in cities denser.

Ziv concluded his remarks by telling businesspeople, "It is worthwhile for you to aim at the third age. This is a growing population with a large amount of capital." According to the figures he presented, while Israel has about one million people over 65 in 2019, this number will increase to 1.75 million people in 2035, 930,000 of whom will be over 75.

Published by Globes, Israel business news - en.globes.co.il - on March 17, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Shahar Ziv photo: Eyal Izhar
Shahar Ziv photo: Eyal Izhar
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