The standstill in the residential real estate market and in the mortgage market does not necessarily indicate an approaching decline in prices. This is the current assessment of Mizrahi Tefahot Bank (TASE:MZTF), the largest mortgage provider in Israel. Uri Yonissi, deputy head of the bank's retail banking division and manager of its mortgage arm, said at the recent "Globes" "Real Estate at the Bar" event that the picture painted by the media lately was different from what was happening on the ground.
In the past few months there has been a steady drop in the amount of new mortgages taken out in Israel. In the first quarter of this year, new mortgages totaled NIS 13 billion, 20% less than in the first quarter of 2016. Yonissi said at the event that he was not perturbed by the figures, which he said were artificially depressed by the "Buyer Price" tenders.
"A false picture has been drawn of the mortgage market in relation to the housing market," said Yonissi. "We are indeed seeing some kind of slowdown in the real estate market, and hence in mortgages granted, but this slowdown is explained by the fact that most transactions in the new dwellings market were in the framework of the "Buyer Price" program. More than 10,000 people who won the right to buy apartments under this program have not yet reached the banks to take out a mortgage. At present, they are using their own equity to pay the developer and the contractor, and they are waiting for construction to get underway before taking money from the bank. That is to say, demand has only been diverted and deferred by a few months, and the figures do not herald a fall in prices."
On the effect of the "Buyer Price" program, Yonissi said, "We have not seen real clarity in the government's intentions. There is a sense that no-one is really directing the market, after we were assured that this was a program to reduce housing prices, and after that they said that it was actually a solution people without their own homes."
Published by Globes [online], Israel business news - www.globes-online.com - on May 14, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017