A summary of 2018 in the Remax chain also reports some price increases, but the chain fears that the government will continue to intervene in the housing market, as “2018 was an interesting year in real estate, it was different from what we have known in recent years,” said Bernard Raskin, CEO of Rasmus Israel. Network data for the past year indicates some price increases, with each city having different market segments.
A trend that is repeating in many cities is the decline of luxury apartments, cottages, and penthouses, but in most cities, there has been an increase or stability in apartments that represent the Israeli standard; four-room apartments.
According to Raskin, in places where the “Mehir Lamishtaken” plan is applied, the network has identified a certain price increase. “Prices are rising because at the prices of occupants, market needs are not taken into account and prices are set in advance, while in the private sector with which we work, construction is in line with the market and we see it there.”
According to the Nahariya network, for example, prices have dropped by 11%: “Private construction is massive and the price of Mehir Lamishtaken is not significant. We are therefore witnessing a drop in prices. In Carmiel, where the “mehir lamishtaken” plan per occupant is dominant, prices have increased by 7%; In Haifa, in the Ahuza neighborhood, price increases of up to 8% for four-room apartments; In Afula, where the volume of occupants represents a significant volume of apartments, prices have increased by 1% for four-room apartments; Harish has increased by 5%; And in Hadera, prices have increased by 7% in four-room apartments.
However, it is important to note that network data only reflects part of what is happening in the market, mainly in the second-hand market, and that, therefore, there is in some cases a divergence between the data from the Central Bureau of Statistics, for example: In a market like that of luxury apartments, individual transactions are those that reflect the price trend presented by the network.
Raskin criticized government intervention in the housing market. “I don’t know where the government has intervened in the housing market and succeeded in solving its problems, which generally causes more damage. Here too, the intervention has been destructive, construction starts have decreased in 2018 for the second consecutive year and the state is unable to produce apartments to meet annual consumption. Raskin stated: “The task has been replaced and instead of producing more residential units, everyone is working to lower housing prices. Regarding the price of an occupant, I understand the desire to help young couples, but wanting to help them does not mean we must act irrationally.”
Regarding the future, Raskin claims that at some point, entrepreneurs will encounter difficulties and will no longer be able to continue. “That’s how a recession starts, it’s not just the entrepreneurs, it’s also the second circle of manufacturers, it’s no secret that real estate is the engine of the economy.”
In explaining the data, Raskin attributed great importance to the issue of investors, who represented 30% of transactions in the past. “We see a lot of populism against investors, although we need more rental apartments and that in recent years there has been a war of all kinds of factors against investors,” said Raskin. “This has another effect: 20% of investors are settling in Poland and other countries, that’s money leaving the country, investors cannot be intimidated year after year, and then they are surprised that prices go up.”
In conclusion, Raskin says he estimates that in 2019, we will see a single-digit increase in prices. “I fear a recession, although the fact that there are fewer ‘goods’ on the market actually mitigates the fear.”
