Construction is up (housing starts in the first quarter of 2011 rose to 11,272 from 9,750 in the corresponding quarter of 2010), but sales are down (the Israel Tax Authority recorded 5,843 new and second-hand home sales in April 2011, down from 6,992 sales in April 2010 and 9,132 sales in March 2011) - and the supply-demand equation is shifting in favor of homebuyers.
According to the second-hand home classified ads site, Homeless, asking prices for homes are coming down, albeit not everywhere or for all types of homes. It should also be remembered that, in the past three years, buyers frequently took a wait-and-see position, based on promises by the housing minister, threats by the governor of the Bank of Israel, announcement by the Ministry of Finance, and the like, but the market had the ultimate say, and buyers returned en masse and home prices continued to climb.
In June, prices for all types of apartments fell in three areas: Ramat Gan-Givatayim, Netanya, and Jerusalem. The steepest drop was in Netanya, which normally sees stronger demand for homes in summer, partly from French tourists who stay at local hotels and check out the housing market in the coastal city.
Prices and demand for large apartments also declined in Haifa in June, possibly because of the massive construction planned for the city in the coming years. The cheapest apartments in the city are still an alternative for bargain-seekers and investors, an hour from Tel Aviv. The average price for a three-room apartment rose by over 7% in June, but was still less than NIS 600,000.
In Modi'in, the winning product is a four-room apartment, after the average price for a five-room apartment jumped in recent years to over NIS 2 million. The asking price for a five-room apartment has not been able to maintain that level, and came down last month. The average price of a three-room apartment fell to under NIS 1 million. Three-room apartments are problematic in the city, which is characterized by young families, most of whom left the metropolitan Tel Aviv area to seek reasonably priced larger homes. The average asking price for four-room apartments continued to rise in June, reaching NIS 1.68 million.
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