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Study: Only 70,000 flats to be sold in 2009
Analysis performed by Geocartography research institute reveals volume of residential real estate deals expected to shrink by 22,000 this year compared to 2008. 'Uncertainty in regards to employment situation deters people from making commitments related to buying an apartment,' says study conductor
Unemployment and the fear of unemployment are leading to a direct drop of more than 10,000 housing units in the number of deals in the residential real estate industry in Israel, according to an analysis conducted by Dr. Rina Degani, research director and managing director at Geocartography Knowledg Group, who specializes in economic feasibility studies.
"In Israel today there are more than 250,000 Jewish households with an unemployed member or an employed member fearing dismissal," explains Degani. "This situation affects their economic decisions and forces them to change their plans. Thus, they are deterred by commitments involved in purchasing an apartment, due to the uncertainty in their employment situation."
According to Geocartography's data, this influences the trend of shrinkage in the demand for residential apartments in rates ranging around 25%-30% throughout 2009, compared to the two previous years.
"According to the estimates of Geocartography's economic division," Degani says, "if the market's situation in the second half of 2009 will be similar to the situation in the first half, the volume of deals is expected to shrink by some 22,000 housing units compared to last year."
This means that the number of acquisitions in the residential real estate industry is expected to total around 70,000 deals only at the end of 2009 – similar to the number of deals between 2002 and 2003.
"The meaning," says Degani, "is a very sharp drop in the volume of activity in the housing market, and in addition, this will have further economic ramifications, as this situation also influences the market of mortgages, kitchens, furniture, new electrical appliances for the apartments, as well as services and other equipment accompanying the purchase of an apartment."
According to the data, the housing units which are about to be subtracted from the market are divided into some 10,000 apartments which will not be bought due to the fear of dismissals and unemployment, some 3,000 flats comprising the market share of foreign residents who have disappeared from the market due to the financial crisis, about 2,000 apartments of buyers who are delaying the act of purchasing an apartment for various reasons, and 7,000 housing units waiting for buyers who are still sitting on the fence and waiting for a change in the market or in prices.
