The Covid-19 crisis will result in housing prices moderating in the near future with few deals being agreed. However, due to the fall in the pace of building starts, and buyers coming of the fence, and the return of investors into the real estate arena, prices will resume their rise, Bank Leumi economists predict in their weekly survey. Leumi adds that the entry of new homebuyers into the market when the coronavirus crisis ends will also influence the sector.
Bank Leumi chief economist Dr. Gil Bufman and economist Yaniv Bar see the major influence of the Covid-19 crisis on the construction of housing being expressed mainly in second quarter figures and a fall in the indices of all activities - building starts, and completing buildings etc. In the coming quarters, the bank sees a recovery in activities, mainly in the buyers fixed price program and less in the open market. This is because the buyers fixed price program offers developers greater certainty.
"Looking ahead, a reduction in the supply of homes is expected in the coming period because of the disruptions caused in the construction industry. Looking to the longer term, many homebuyers who are currently on hold and abstaining from undertaking deals are expected to return to the market (depending on the pace of return to routine), while on the other hand the rate in the growth of supply is expected to remain relatively slow due to the low rate of building starts and the extended time for construction," the Leumi economists write.
Furthermore, the Leumi economists believe we will see the return of investors to the housing market because of the negative impact of the coronavirus on other investment options. "We may see a fall in sales following the coronavirus leading to a slowdown in the development of prices in the short term, but in the medium to long term we may see the pace of price rises picking up due to developments on the supply side."
Published by Globes, Israel business news - en.globes.co.il - on June 25, 2020
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