250 houses are being offered for sale in Herzliya Pituah, with few takers. There were only 47 deals of NIS 5 million or more last year, the fewest since at least 2010 and half the usual number in recent years. The main reason is regulatory changes, and possibly also a change in buyers' tastes and trends.
At the same time, the more modest luxury housing market for Israeli buyers that has been developing in eastern and central Herzliya in recent years remained stable.
A recent review published by the Ministry of Finance chief economist shows that the number of foreign residents buying housing in Israel has been on a downtrend for many years and has now reached 1,500 per year, half of the number five years ago and a quarter of the number in the middle of the preceding decade. The ones who are buying housing are doing it in Jerusalem and Tel Aviv, not Herzliya.
"The market for housing in Herzliya Pituah is dead," says real estate appraiser Israel Yaakov. "Activity here came to a standstill in 2017 after Kahlon raised the purchase tax and the Prohibition on Money Laundering Law went into effect. Money laundering was involved in quite a few of the houses sold over the years."
"Not many foreign residents are coming," says real estate agent Uri Tal. "When they come to buy a house here, it's usually for one of three reasons: immigration to Israel, investment in Israel, or as a vacation home. Immigration has fallen steeply. People don't buy vacation homes because they're selling their homes in London or Paris; they do it with their extra money. Because of the crisis that began in 2008 and continued later, people decided to keep their money close at hand.
"Israelis look more for bargains; they don't care so much about being close to the sea. They can find much cheaper properties in Ramat Hasharon."
Among the few deals this year in Herzliya Pituah this year are a 574-square meter house on Kidma Street, sold for NIS 26.5 million; a 600-square meter house on a 760-meter lot on Levi Eshkol Street, sold for NIS 27 million; and a 350-square meter house on Baruch Kamin Street sold for NIS 21 million.
"Many of the houses now being offered for sale in the western part of the city are old and built on 0.5-dunam (0.125-acre) lots. They don't meet current planning and building standards; their prices reflect the prices of the land, which are usually NIS 5-6 million for a half-dunam lot. In many cases, the buyers prefer to demolish the houses," says Yaakov.
Yaakov talks about developers who bought such lots, invested millions in building a new house, and hoped to make profits by selling it, but the depressed state of the market prevented it. For example, a developer bought a 600-square meter lot on Hanuriot Street for NIS 6 million, renovated it for NIS 6 million, and sold it for NIS 12 million. "He planned to sell the house for NIS 18 million, but couldn't pull it off," says Yaakov. "It's a buyers' market; they set the price."
In other instances, if the seller is not eager to sell, the house remains for sale at a given price for years. "Sometimes you see a seller suddenly willing to cut his price way down, and that's when you learn that he's in a hot spot," Tal says. Even then, there are quite a few houses empty or rented out whose owners have not lived in them for a long time.
Luxury is moving eastward
The luxury in Herzliya Pituah is very different from what is happening in the eastern part of the city. An independent and relatively modest luxury housing market has developed in recent years in the city center and on streets in the area around Interdisciplinary Center Herzliya.
New penthouses in these areas are being sold for NIS 4 million, but a penthouse on Esther Raab Street sold for NIS 6.15 million and penthouses on Dori Street sold for NIS 5.8 million and NIS 5.5 million. These are only a few examples of the high prices in deal in the city outside of Herzliya Pituah.
Published by Globes, Israel business news - en.globes.co.il - on March 18, 2019
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