Israel's real estate market is cooling down, but prices aren't dropping

Only 7,900 apartments were sold in September; the average length of time to sell an apartment grows to 38 weeks.

Real Estate (photo credit: JPOST STAFF)
Real Estate
(photo credit: JPOST STAFF)

The real estate market is continuing to cool down, as reflected in data presented by the Chief Economist at the Treasury, Shira Greenberg. 

According to the data, 7,900 apartments were sold in September, similar to September 2021. A decrease in sales was recorded; compared to August it decreased by 4%. The downward trend in the volume of sales transactions continued through October. 

It also appears that investor purchases dropped steeply to 27% compared to September 2021 and amounted to 1,400 apartments.

The main reason for this is the spike in interest rates and the fear of stagnation in rent prices. The number of apartments in the hands of investors was reduced by 430 apartments. Without the transactions within the price per resident, the number of transactions in September will increase by 4% to 7,400 compared to the corresponding period last year. 

There was a certain slowdown in price-to-resident sales that may change following recent sales promotions, as well. Sales campaigns in Kiryat Gat and Beersheba led to a 45% jump in transactions in the southern region.

 Israelis protest against the soaring housing prices in Tel Aviv and cost of living, on July 2, 2022.  (credit: TOMER NEUBERG/FLASH90) Israelis protest against the soaring housing prices in Tel Aviv and cost of living, on July 2, 2022. (credit: TOMER NEUBERG/FLASH90)

It's taking longer to sell apartments

In the meantime, the cooling of the market is also reflected in the longer periods of time it now takes to sell an apartment, which is getting longer and longer. According to the data, apartments sold by owners who pre-bought an apartment before selling their previous home were on the market for 38 weeks: four weeks longer compared to September 2021. 

Before this, a long time on the market averaged out at 26 weeks. In the central region there was a 17% decrease and in Netanya an 8% decrease. To compare, in the Beersheba area there was a 22% increase.

The data for September is based on higher interest rates and a higher volume of mortgages

Responding to financial figures, contractors are now running numerous sales promotions. They offer financing of mortgage payments for one year, furnishing the apartment and partial payment of the linkage differences. 

They’re still not ready to lower prices at this stage, though, which increases the inventory of unsold apartments.