Apartment Sales Surge: April Sees 13% Dip in Apartment Sales But Market Shows Resilience

Data released by the Central Bureau of Statistics (CBS) reveals a robust performance in Israel's real estate sector, with April witnessing a notable surge in apartment sales despite a seasonal slowdown attributed to the Passover holiday. While the month recorded 6,892 apartment sales, marking a 13% decline from March figures, analysts assert that when adjusted for seasonal effects, April actually witnessed a 3.7% increase in sales compared to the previous month.

A stark contrast is drawn to April 2023, where only 3,863 apartments were sold during the Passover holiday, representing a staggering 78.4% increase in sales this year. The market's resilience is attributed to its adjustment to the Bank of Israel's decision to raise interest rates, with the prime rate now stabilized at 6%.

Construction Companies' Promotions Drive Sales

Construction firms have responded to the interest rate hike by introducing promotions that require buyers to make a partial payment upfront, delaying mortgage acquisition until later. This strategy has significantly bolstered sales, with new apartment transactions soaring by 118.6% in April compared to the same period last year. While the second-hand market also experienced growth, it was at a more moderate rate of 54%.

Notably, the inventory of unsold new apartments has seen a slight reduction, with Tel Aviv leading in unsold units at 9,011, followed by Jerusalem, Bat Yam, and Netanya. Dr. Shmuel Abramson, the chief economist at the Ministry of Finance, corroborates these findings, highlighting the role of contractors in driving sales. Abramson's analysis emphasizes the surge in cash flow, primarily attributed to increased sales facilitated by buyer-friendly payment terms.

Discrepancy in Cash Flow

Abramson's review underscores a significant gap between potential cash flow and actual cash flow, with potential flow reaching NIS 8 billion, a 135% increase from last year, while actual cash flow stands at NIS 4.7 billion. This divergence reflects the prevalence of deferred payment arrangements, where buyers pay the main price of the apartment upon receiving the key.

Despite seasonal fluctuations and ongoing adjustments to interest rate changes, Israel's real estate market demonstrates resilience and adaptability, buoyed by innovative sales strategies and sustained buyer demand. As the market continues to navigate evolving conditions, stakeholders remain cautiously optimistic about its long-term trajectory.