The wealth of recently published new residential real estate data cannot be ignored. Fewer deals, Central Bureau of Statistics graphs and tables, and data from the Madlan online real estate agency show a drop in the average nationwide price of residential real estate. Even the leaked report by the Chief Government Appraiser shows a drop in price.
Something is undoubtedly happening in the real estate sector. The decline in the volume of deals is no longer a one-time figure; it is a trend that has been continuing for a number of months. The problem is that where figures like an average housing price are concerned, it is premature to declare that they amount to a trend.
Housing prices may fall - after all, they will not go on rising forever. Until a trend is clearly involved, however, it is necessary to wait patiently and see what happens down the road, or at least until the second quarter of 2017.
Meanwhile, however, the Ministry of Finance recently decided to add another dimension to its housing policy. After the plans and measures, including the buyer fixed price plan, raising the purchase tax for investors, and the tax on a third housing unit, the Ministry of Finance apparently realized that there is one more thing that it is worthwhile addressing - expectations.
It is known that in addition to concrete measures, such as raising taxes and lotteries and sales of discounted housing units, what can really accelerate the downward movement in prices is a change in expectations: housing buyers starting to think about falling prices and waiting, and housing sellers anxious about falling prices and hurrying to sell, or later even lowering their own price.
That is why the Ministry of Finance has recently been releasing statements about the real estate sector, all supporting the thesis that few deals are taking place. Only last week, a survey was suddenly published referring to a drop in the volume of deals in 2016, compared with 2015 - figures that have already been previously published by the Central Bureau of Statistics. Statements by Minister of Finance Moshe Kahlon and Minister of Construction and Housing Yoav Galant are already less hesitant about a possible fall in prices, while the National Housing Board chairman was far more decisive last week, stating that prices were falling, and would continue to fall.
At the same time, surveys by the Ministry of Finance chief economist have also recently been focusing more and more on the question of investors, the decline in their activity in the market, and the buyer fixed price plan. People buying better housing, for example, whose figures were analyzed more thoroughly in older surveys, have virtually vanished. That does not mean that the published figures are incorrect, but it does mean that someone is choosing what to emphasize.
There is also reason to assume that the focus on figures about investors and how the drop in their activity in the market is affecting the volume of deals is also designed to send a message, not only to buyers about a change in the market, but also to the Supreme Court justices who must decide the fate of the tax on a third housing unit.
In the bottom line, it is important to say that we may have really reached the point of a change in the real estate sector. It could be that housing prices are starting to fall. It is also necessary, however, to realize that the review by the Ministry of Justice Chief Government Appraiser, which the Ministry of Finance tried to conceal, is returning, now that its figures are convenient for the Ministry of Finance. Expectations are tricky; they can bring about a change even before the figures themselves explicitly show one. It is important, however, to continue following the data in order to determine whether, after almost a decade of rising prices, the situation is really starting to change.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 22, 2017
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