Housing prices will likely fall 15% over the coming months, according to a Geocartography Ltd. analysis of real estate prices. Geocartography will present its findings at the assessors institute conference in Eilat tomorrow.
Geocartography says that 30% of people who were planning to buy an apartment have put off the idea, and another 30% are waiting for the economic situation to clear. The slump in demand began in September. Geocartography CEO Dr. Rina Degani said that demand for apartments in November was down 10% compared with September-October.
Geocartography said that, among the people who are waiting before buying an apartment, 63% expect prices to fall, while 23% are waiting because of the market instability. 4% have postponed buying an apartment because mortgage rates have risen, another 4% have to sell their present apartment, and 6% cited other reasons, including worries about being laid off, or lack the necessary money.
November was the first month since 2004 in which the character of people seeking to buy an apartment changed. 45% of potential homebuyers are seeking a better apartment, compared with 33% of potential homebuyers in recent years.
Geocartography states, "Because of the rise in demand from people seeking to upgrade to bigger or better apartment, and the drop in demand by young couples and first-time homebuyers, the average price of large apartments in certain areas will likely rise. Until now, people seeking a better apartment, who have more wherewithal, invested part of their money in the capital market. However, because of the crisis, they will probably invest more of their money in real estate."
Geocartography adds that despite the severe instability in the housing market, "contractors and owners of second-hand apartments have not yet lowered prices, hoping for a positive turnaround in the market. However, they will probably have to lower their asking prices in the end."
Apartment prices have already fallen by 2-9% in most large markets Geocartography examined. Apartment prices in Tel Aviv have fallen 5-6% in the past three months, but they have risen in Bat Yam "because of positive local developments". Prices for second-hand apartments in Jerusalem are unchanged, or have even risen slightly because of the city's housing shortage. However, prices for luxury apartments in the capital will probably fall as demand from foreign residents slows.
Published by Globes [online], Israel business news - www.globes-online.com - on November 24, 2008
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