Although the Israeli residential real estate market is demonstrating resilience during the Covid-19 pandemic, there has been a collapse in the market in Tel Aviv in terms of the number of deals, according to data provided to "Globes" by the Madlan online realtor. Madlan found that based on data from the Israel Tax Authority, the number of deals in the first few months of 2020 in Tel Aviv was even higher than last year. But then the Covid-19 crisis struck and the market swiftly chilled. In the first seven months of 2020 there were 1,080 housing real estate deals in Tel Aviv compared with 3,213 in the same period of 2019 - a fall of 66%.
The first indication that there were problems in the Tel Aviv housing market came when a survey by Ministry of Finance chief economist Shira Greenberg found that during the second quarter of 2020 (during the first lockdown), housing sales were down 41% from the preceding quarter and 34% from the corresponding quarter of 2019.
Indications are that the situation improved between June and September in the country as a whole with tens of thousands of deals per month but in August and September the number of deals continued to fall in Tel Aviv. According to Nadlan there were only 76 deals in Tel Aviv in August compared with 373 last year and just 30 in September (the second lockdown was imposed in the middle of the month) compared with 429 last year. Due to delays in deals being recorded by the Israel Tax Authority, the 2020 numbers could rise but not by very much.
Madlan VP Sales Tal Kopel said, "Of all the cities in Israel, Tel Aviv has taken the main hit from coronavirus in terms of the number of deals conducted in it. If you examine just the third quarter compared with the corresponding quarter of 2019, Israel's real estate capital has presented a decline of almost 80% in the number of deals.
Kopel believes the main reason for this is the high prices in the city. "This matter is problematic when the economic future is not clear and the unemployment figures are rising and climbing. In addition, some of the outstanding advantages of Tel Aviv have disappeared during the coronavirus - the cultural life and the bustling streets, fully being the focus of jobs, and the many options for leisure. In the past people were ready to pay a premium for the possibility of living in the heart of things but that seems at the moment less justified."
Despite all this prices in Tel Aviv are still creeping up, according to the Central Bureau of Statistics. Prices have risen 0.4% in Tel Aviv since the start of 2020 compared with a 0.7% rise in the country as a whole. The average price of an apartment in Tel Aviv is NIS 3.01 million.
Published by Globes, Israel business news - en.globes.co.il - on November 26, 2020
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