March 2012–Two months into the 1st Quarter of 2012, the real estate market in Israel has been showing some signs of slightly increased activity. According to a recent report from the Central Bureau of Statistics, the number of new apartments sold in December of 2011 at 2,065 was the highest number since March of 2011, when the real estate slowdown in Israel seemed to begin. The number of new apartments sold in January of this year dropped slightly to 1,894, but that number was almost as high as it was in March of last year.
At the same time, the current unsold inventory of new apartments is the highest it has been in the last few years. This number could be misleading, however, as the number of housing stats in the 4th Quarter of 2011 was down 13% from the 3rd Quarter and down 8% compared to the 4th Quarter of 2010. Bank Leumi officials recently stated that if housing starts don’t begin to increase again soon, real estate prices in Israel could rise again in the not-too-distant future—although not to the degree they have over the past three or so years. Echoing Bank Leumi’s statements, Bank of Israel Research Department Director Prof. Nathan Sussman actually predicted a moderate rise in real estate prices this year during the Globes real estate conference in early March
The unemployment rate in Israel averaged just 5.6% in 2011 compared to 6.6% the previous year. The 2011 unemployment rate was a 32 year low. Although the unemployment rate may not stay at its current level, joblessness does not appear to be an issue in terms of prohibiting Israelis from purchasing apartments.
Disagreeing slightly with the Bank Leumi statements and the Bank of Israel predictions, Bank Hapoalim chief economist Leo Leiderman a few weeks ago predicted that home prices would fall this year by single digits. According to the Globes article where Leiderman was quoted, over the last 20 years, the largest price decline in Israel real estate prices was 5.9% in 2003—a year in which there were numerous suicide bombings in Israel.
The early signs, then, for this year seem to be pointing towards a resumption of buyers getting back into the marketplace with anywhere from a slight decline in prices to a slight rise in prices. In other words, for those buyers who were waiting on the sidelines for prices to drastically drop, they may be waiting in futility.
Lyle Plocher is the Director of Buy Property In Israel and can be reached by email at email@example.com.