Real Estate Market Continues to Struggle Despite State Tenders and August Mortgages

Recent successes in state tenders and a surge in August mortgages are failing to bring the much-anticipated signs of recovery to the real estate market, according to data released by the Central Bureau of Statistics (CBS) on Thursday. The CBS data paints a gloomy picture for the new apartment sector.

In July, only 2,375 new apartments were sold to the general public, marking a significant drop of approximately 20.6% compared to the previous month (June) and a stark decline of about 17% compared to the same period in 2022.

These findings come on the heels of a review published earlier this week by the incoming Chief Economist at the Ministry of Finance, revealing a nearly 30% decrease in the sale of both new and second-hand apartments in July. This downturn is reminiscent of the days of the second intifada, reflecting a concerning trend in the market. When seasonality is taken into account, the decrease compared to the previous month stands at 6.4%. A closer look at the trend data shows an average monthly decrease of 3.1% from August 2021 to July 2023.

While there was a slight uptick in sales over a three-month period from May to July 2023, with 7,610 new apartments sold (an increase of 9.7% compared to the previous three months), seasonally adjusted data shows a 6.6% decrease, with 7,290 housing units sold. This is compared to 7,800 new apartments sold, seasonally adjusted, in the preceding three months from February to April.

The CBS also examined the sale of new apartments with government subsidies (apartment plans at a discount) and found that in the last three months, 1,980 new apartments were sold with government subsidies, accounting for approximately 26.1% of the total new apartment sales. This marked a notable increase of 12.9% compared to the previous three months.

Regionally, the southern district and central district led in the percentage of new apartments sold under discounted plans, with 25.9% and 25.1%, respectively. Other districts included Tel Aviv (1,165 new apartments), the northern district (976 new apartments), Haifa (839 new apartments), Jerusalem (549 new apartments), and the Yosh district in Israeli settlements (207 new apartments).

Rishon Zion and Sderot emerged as the top-performing settlements in the three months from May to July 2023, with 532 and 495 apartments sold, respectively, and astonishing increases of 282.7% and 560%, respectively, compared to the previous three months. They were followed by Jerusalem (405 new apartments, a decrease of 38.8%), Ashkelon (364 new apartments, a decrease of 3.4%), Tel Aviv (358 new apartments, an increase of 52.3%), and Haifa (301 new apartments, an increase of 58.4%).

Other cities on the list included Petah Tikva (264 new apartments, a decrease of 26.5%), Be'er Sheva (252 new apartments, a decrease of 21%), Netanya (242 new apartments, an increase of 38.3%), Afula (215 new apartments, an increase of 106.7%), Nahariya (204 new apartments, an increase of 88.9%), and Netivot (198 new apartments, a plunge of 74.6%).

Regarding new apartments remaining for sale, CBS data indicated that by the end of July 2023, there were approximately 59,820 housing units available. Of these, 30.3% were in the Tel Aviv district (18,100 apartments), and 23.9% were in the Central district (14,330 apartments). The number of months of supply (the time it takes to sell an apartment) stood at 24.2 months, reflecting a stagnant real estate market as of July. For comparison, in the previous three months, the number of months of supply was 23.6 months, underscoring the ongoing challenges facing the market.