Contractors expect that home prices will rise by an average of 2% in 2013, according to a survey by BDI Coface, ahead of the annual conference of the Association of Contractors and Building in Tel Aviv-Jaffa and Bat Yam. 40% of contractors expect home prices to rise in 2013, 51% expect prices to stay unchanged, and 9% expect prices to fall.
67% of contractors expect activity to increase in the fourth quarter of 2012, 31% expect activity to remain unchanged, and 7% expect activity to decline. For 2013, 56% of contractors expect activity to increase, and 44% expect activity to decrease.
56% of contractors said that the cost of financing rose in 2012.
BDI-Coface co-CEO Eyal Yanai said that not only homebuyers sat on the fence because of the social protest. During the past year, contractors have taken extreme caution in response to the drop in demand for homes in the wake of the social protest and government promises to bring down home prices, as well as the credit crunch, which has sharply raised financing costs. As a consequence, housing starts in the first half of 2012 were 12% less than in the first half of 2011, and the number of building permits issued fell by 17% in January-May, compared with the corresponding months of last year. Contractors add that the shortage of skilled workers is slowing construction. As a result, average construction time of an apartment was 4% longer in 2012 than in 2011.
Yanai says that the future of the construction industry depends on the future of the economy as a whole. If Israel enters a recession due to the global economic crisis, this will affect the construction industry and the ability of households to buy homes, and may affect prices as well, especially if the government keeps its promises to increase the housing supply.
Published by Globes [online], Israel business news - www.globes-online.com - on October 23, 2012
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