Real-estate prices will start recovering during the second half of the year, according to Erez Cohen, the chairman of the Land Appraisal Association. In an interview with The Jerusalem Post, Cohen explained that "real-estate prices in general have held relatively steady during this crisis. "During the past 12 months the price for properties valued from NIS 1 million to NIS 3 million fell by approximately 5% on average," he said. "The prices for less expensive properties fell by only 3% on average but the average falls in price for expensive properties with a price tag of NIS 3 million and more fell on average by 15%." The reason for the fall in the price of expensive real estate is simple. These properties are purchased by the rich, who in most cases want to upgrade their standard of living. But in these difficult times, upgrading can wait. As Cohen explains, "Most of the disposable capital of the affluent is invested in the capital markets. The value of these holdings has fallen significantly, some by more than 50%. "No one in his right mind is going to sell his securities at the current reduced values for the sake of a bigger penthouse or a larger garden. And since as stands to reason the buyers of expensive real estate are the rich, demand has fallen dramatically." Cohen's prediction regarding a real-estate price rebound in seven to eight months contravenes the general consensus, as most experts expect the current crisis to extend through 2010. But Cohen explained that the expected rise in prices will actually be a result of the same crisis, which has affected the level of activity in the building industry. "Developers are worried by the crisis and consequent fall in demand and they are building less. In 2008 housing starts amounted to 29,000 this year they may fall by half, to 15,000. "But while housing starts and, consequently, supply is contracting fast, demand is holding more or less steady. Each year approximately 37,000 new households are created in this country, by newlyweds, singles who leave the parental nest, new immigrants, and so on. Even when times are tough demand from this source hovers around 30,000. "So this year and the next I expect demand to outstrip supply and consequently, real-estate prices will rise". But why does Cohen predict a rise in prices in the second half of 2009 while most other experts predict the contrary? "Because most experts base their predictions on the expected fall in demand. I also believe that demand will fall, but I expect supply to fall more," he said.