An update that arrived in our email today from Haim Levy Real Estate in Jeans Real Estate Investment - Market forecast…
An update that arrived in our email today from Haim Levy Real Estate in Jins Real Estate Investments - forecast for the real estate market in Israel in 2019 - what do you think?
We have no business relationship with him, and of course we are obligated to give the writer credit.
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As in every year, I would like to present my real estate forecast for the coming year with a view of the coming years. This e-mail will deal with the Israeli market only. In the next newsletter we will analyze the global market.
The year 2019 will be characterized by tense anticipation of the results of the elections we expect in April. We are still in the market with pent-up demand. The three main demand groups in the market depend on the Minister of Finance's opinion and expectations for his actions:
1. Buyers of the first apartment still sit mostly on the fence in anticipation of the promised benefits by the state - apartment significantly reduced.
2. Housing enhancers sit on the fence in the absence of sufficient transactions and as a result of the uncertainty prevailing in the market. This group is afraid to buy their next apartment for fear they will not sell the existing.
3. The rate of real estate investors affected by the rise in tax liability fell significantly from a peak of 33 to about 14% of total transactions. They too are sitting on the fence waiting for the uncertainty in the market to dissipate.
Most of the building starts within the framework of occupant prices (76%) are located in the periphery, although most of the demand is in the center of the country and in the Dan Region. This phenomenon causes a large part of the winners in the price to dwell in the periphery to become, against their will, real estate investors, ie, to buy apartments for rent while their owners will rent in the center of the country.
This policy of the government and its failure in recent years to bring about a significant increase in building starts continues the shortage of housing units that the market needs. Below is a graph describing the rate of construction starts versus demand between 2010-2017. From this graph, we see that despite the severe shortage in Israel that began to fuel the price increases that began in 2007, the state is building less than the quantity required to meet natural growth.
Source: CBS (Central Bureau of Statistics)
On the other hand, property prices in Israel are 'not cheap' in a global comparison. Tel Aviv, for example, is ranked fifth in the world property value index - expensive from Tokyo, Paris and Moscow. Despite this, if we look at property prices in terms of purchasing power, it seems that we are 'still' located in the green area of the graph, that is, we can afford to pay the current real estate prices:
Bottom line, in the short term - medium and after the election dust has dissipated, I expect continued strengthening and slight increases in property prices in areas of demand - especially in Gush Dan and the center of the country. Therefore, those who are thinking of investing in real estate in Israel - this is definitely the time. On the other hand, at the same time I expect price declines in certain peripheral areas and especially in those areas where substantial construction of apartments at the price per occupant has taken place and is taking place. In some of these areas we are expected to collapse prices, ie, double-digit declines in the average price.
In the rental market, I expect a sharp rise in rental prices (over 3% per annum) in the cities of the Dan Region and the demand areas. In the peripheral markets and in markets where there was massive construction for investors (Rosh Ha'ayin, Harish and Carmi Gat), I do not expect a recovery in rental prices in the coming year.
The author:
Chaim Levi
Real Estate Investment Analyst - Jeans Real Estate
Link to the original post in the United States Real Estate Forum on Facebook - Works on a desktop computer (To view the post must be members approved for the forum)
The original responses to the post can be read at the bottom of the current post page on the site or in the link to a post on Facebook and of course you are invited to join the discussion
Is there a shortage of apartments in Israel? The answer: no. But this is what the media pumps us out of interest. Fake news. In practice - the speculative demand for apartments has disappeared from the market (or "make it abroad..."), it is very likely that in the coming years either the interest rate will rise or the taxes will rise or both and the prices will fall. And every managing investor in the country understands this.
Sucks to see "analysts" coming from a position.
If I'm not mistaken, it's an apartment marketer for investment, so this whole nice mile is not really objective.
Recommend buying an apartment today? Based on a crystal ball?
Reminiscent of the declines in the markets in December that all the "analysts" recommended to sell, the market corrected almost everything in January and February…
Bottom line - a newsletter is a serious marketing force, there are also people who will really do what is recommended there, it is a pity that the writer does not spend a few more minutes thinking about the risks and consequences of his words.
If the analysts were right I would be a millionaire today. I would say so, a young man under the age of 50 who does not have an apartment will only buy an apartment in the center. Those who have passed and do not own an apartment will continue to pay rent.