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 1.5m.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 2011.Azimuth Advertising CEO Benny Keret said the growing figure reflected the public’s previous acceptance of the rise in prices.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 apartments.“This does not necessarily reflect a drop in need but a lack of confidence in finding a three-room apartment,” he said.Peer said contractors should keep in mind this finding for future projects, and cities should encourage the construction of three-room apartments to attract young people.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 housing need.”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 said.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 altogether.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 months.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.