"I think we are at the beginning of ten years of economic crisis, and people will have problems buying a home," Israel Land Authority director Adiel Shimron said at the opening event of the IDC Herzliya Real Estate Club held at "Globes" last week. Shimron compared the coming decade in the residential real estate market to the first decade of this century, which was characterized by falling prices and stagnation.
Last week's event was also attended by the director of the Urban Renewal Authority Haim Avitan, Haim Masilati, chairman of the Real Estate Appraisers Association in Israel, and Itzik Levy, chairman of the Israel Association of Realtors. But whereas the others spoke of the effect of the coronavirus pandemic on the real estate market in Israel as transient, Shimron said that he saw it as a factor that would change the market entirely.
Shimron briefly surveyed the residential real estate market over the past 30 years: in the 1990s there were steep price rises in the wake of the mass immigration from the countries of the former Soviet Union. "In that decade, there was massive construction led by the government, accompanied by rising prices. At the beginning of the 2000s there was a fall in home prices of 30% in real terms, but in the past decade prices have again risen substantially. I think that the decade to 2030 will be similar to the crisis decade between 2000 and 2010," Shimron said.
Shimron attributes to the coronavirus a significant role in the changes he foresees in the market. The economic pandemic stemming from the medical one, he said, will lead to a general economic crisis, which will have direct consequences for residential real estate. "People will have a problem in buying a home and taking on a mortgage in such a situation," he explained.
But beyond that, Shimron sees 2020 as similar to the end of the 1990s in the market itself. "The starting point for the market today is exactly as it was then, with a surplus supply of housing units in several places, such as Beersheva, Kiryat Bialik, Acre, and Naharia, and high prices that have stabilized recently. The planning stock is large, and a few days ago, Minister of the Interior director general Mordechai Cohen said that the housing crisis had been solved."
Other participants on the panel saw things differently. Masilati, for example, said that the market had not come to a halt, and that there was demand for homes. He pointed out that July and August this year had seen a welter of transactions, and said that the problems caused by the economic pandemic, among them layoffs and unpaid leave, were affecting the real estate market mainly in the form of purchases of cheaper homes. "A couple that has got into financial difficulties will not buy an apartment for NIS 1.5 million but for NIS 1.3 million. Life goes on, people marry, people divorce. The market is going in the direction of cheaper apartments, but it won’t get smaller," he said.
Published by Globes, Israel business news - en.globes.co.il - on November 9, 2020
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