Herzliya beach house 521.
(photo credit: Uriel Messa)
Israelis have reached the limit of their financial capacity to pay for homes,
according to the tenth biannual survey by Globes, Bauman-Ber-Rivnay Saatchi and
Saatchi unit Azimuth Advertising, and Mutagim Research Ltd.
For the past
five years, the survey has examined the public’s intentions to buy a home in the
next three months and its perceptions about home prices. The survey had 500
respondents, half men and half women, comprising a representative sample of
Israel’s adult Hebrew-speaking population.
The public has not been able
to ignore the unceasing rise in home prices since 2007 and adapted to the
reality of high prices. Asked about the maximum price they would pay for a home,
35.2 percent said NIS 1.2 million to NIS 1.3m., and 16.7% said NIS
A comparison between the current survey and the previous one six
months ago found a negligible rise of NIS 3,000 in the amount that home buyers
are will to pay for a home. The public’s willingness to pay more has risen
steadily since early 2009.
However, whereas the average amount the public
was willing to pay was NIS 1,103,000 in the first half of 2010 and NIS 1,249,000
in the second half, it only rose to NIS 1,252,000 in the first half of
Azimuth Advertising CEO Benny Keret said the growing figure
reflected the public’s previous acceptance of the rise in
However, he believes the current figure indicates that “the
public has reached its limit to pay for a home.”
Alongside the higher
home prices that the public is willing to pay, the type of home people are
seeking has changed. Demand for three-room apartments fell from 23% of potential
home buyers in the second half of 2010 to 12% of potential home buyers in the
first half of 2011.
Mutagim Research CEO Avi Peer attributed the plunge
in demand for three-room apartments to a lack of available
“This does not necessarily reflect a drop in need but a lack
of confidence in finding a three-room apartment,” he said.
contractors should keep in mind this finding for future projects, and cities
should encourage the construction of three-room apartments to attract young
Keret said the findings indicated the departure of investors from
the real-estate market.
Whereas demand for five-room apartments remained
unchanged, and demand for six-room apartments fell from 9% of all potential home
buyers in the second half of 2010 to 2% of all potential home buyers in the
first half of 2011, demand for fourroom apartments rose 6% in the first half.
Keret said the growing interest in four-room apartments indicated a “real
Demand for three-room apartments continued to shrink, but
demand for smaller apartments continued to grow. Seven percent of potential home
buyers said they were seeking a studio or two-room apartment, up from 2% of
potential home buyers in the previous survey.
Does the increase in demand
for small apartments reflect home buyers’ lack of wherewithal to buy a larger
apartment, or is it a new trend? Keret said the survey’s findings indicated a
new lifestyle: individuals and couples living in studio and two-room apartments.
In most cases, individuals and couples over 30 are willing to compromise on
living space in favor of a central location suited to their lifestyle, he
Israelis have given up the idea of buying a house, even a small
one. In May, a quarter of people who considered buying a home in the next six
months changed their minds, according to the Consumer Confidence Index for June,
compiled by Globes Research and pwc Israel. Fewer people are considering a new
or second-hand apartment, and many have fence-sitters given up the idea
Only 6.4% of respondents in the June consumer-confidence
survey expressed an intention to buy an apartment, down from 8.5% in the May
survey. The figure for June is the lowest figure for over a year. The number of
people considering buying an apartment has fallen for three consecutive
The biggest change in the June consumer-confidence survey was the
plunge in the number of fence-sitters. Previous surveys found a large group of
people who were waiting for developments before deciding to buy an apartment in
the next six months. In just one month, the number of fence-sitters fell by over
40%, explaining why fewer people are willing to buy apartments.