2019: sharp 42% surge in demand and of new apartments - prices rose 3% in November-December

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by Ifi Reporter Category:Real Estate Feb 14, 2020

The CPI fell 0.4% in January, in line with market expectations, according to the Central Bureau of Statistics (CBS) today. In December 2019, the CPI remained unchanged. Significant price declines were recorded in apparel and footwear (6.4%), culture and entertainment (0.8%). % And food (0.5%) A notable rise in prices was recorded in fresh vegetables and fruits (3.1%).
In the last 12 months (January 2020 versus January 2019), the CPI rose 0.3%. The CBS also revealed that housing prices (news and second hand) rose 3% in November-December 2019 compared to the corresponding months in 2018. New housing prices decreased by 3% compared to the same period, on the basis of cost-per-dwelling prices.
Comparing the total transactions in November-December 2019 compared to October-November 2019 shows that house prices fell by 0.2%.
Price declines were recorded in the North and Central District (0.4%), and Tel Aviv and Jerusalem (0.2%). The Southern District remained unchanged, while Haifa District saw a 0.7% increase in housing prices.
Compared to the corresponding period last year, there was an increase in all districts - 5.7% in Tel Aviv (the sharpest increase), 3.8% in the Northern District and 1.8% in Haifa.
The average price of an apartment purchase was NIS 1.53 million in the fourth quarter of 2019, compared with NIS 1.529 million in the third quarter.In 2019, there was a sharp 42% surge in demand and sale  of new apartments for sale. According to CBS data released, the number of homes wanted - for sale (ie, for self-construction, purchase groups, rental, etc.) - was 50,270 in the past year, while in 2018 only 40,799 - a 23% increase .

Over the past decade, in 2015 alone, there was a higher demand for apartments - 51,000. In mid-2015, Finance Minister Moshe Kahlon launched a price plan for the resident, which allows the purchase of an apartment at a discount of hundreds of thousands of shekels to households that do not own an apartment. Following the launch of the program and the viewing of all these young couples for a discounted apartment, demand has plummeted: in 2016 the number of apartments sought was 49,000, in 2017 it had already dropped to 43,000 and in 2018, as mentioned, a slump.
The demand data for dwellings consists of the number of new dwellings sold in the year under review, and the number of new dwellings not for sale.
The number of new apartments sold in 2019 is what led to the sharp rise in demand for apartments. This year, home sales jumped to 32,456, up from 22,89,000 in 2018 - a nearly 42% increase, and about 24,000 in 2017.
The reason for the sharp rise in the number of new homes purchased is the fact that dozens of cost-per-month projects have matured in the past year and have reached a building permit phase where the lottery winner can sign a contract to purchase the apartment. These are enough purchasers
Housing demand data must be examined against the supply of apartments, in order to assess the future price trend. In December 2019, the CBS released its 12-month construction start and finish data - until September 2019. The report shows that in the period reviewed, construction of 51,460 apartments was completed, and 52,360 apartments began to be built. That is, the economy manages to produce exactly the same amount of demand .
However, in Israel the high natural growth rate in the Western world - so that demand will only increase. In addition, in the last decade - until the last year - the economy has not been able to supply the required number of apartments, and it is estimated that there is a cumulative shortage of tens of thousands of apartments - so that demand will not soon rise, and if the pace of construction starts will not accelerate, house prices will not fall.
In 2019, almost half (46.7%) of the apartments sought were in Central and Tel Aviv districts - 12,516 in the first, 10,980 in the second. Thus, in these districts, the new dwellings for sale are high relative to the rest of the country, at 77.7% in Tel Aviv and 70.8% in Central District. In other words, demand for new apartments is between Hadera and Gedera, where the state is required to accelerate the pace of new construction. The challenge is complicated because the vacant land stock in this area is limited.
The cities that sold the most apartments are Ramat Gan, with 1,583, Herzliya (1,394) and Tel Aviv (1,323). These figures indicate not only demand but also supply, which is only available in cities where apartments are being built; For this reason, the list of cities in which at least 500 major and important cities like Givatayim, Bat Yam, Bnei Brak, and Kiryat Ono is absent from the list of cities. To meet rising demand for apartments in the center, the state will have to find ways to promote residential construction in these cities as well.
 

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