Significant price gaps recorded between new and second-hand apartments (archives)
Photo: Avi Moalem
Israel's real estate market was characterized in 2012 by a further rise in housing prices, at an average rate of 4.5%.
While in 2008 Israelis needed less than 100 salaries on average to buy an apartment, in 2012 they needed as many as 128 salaries.
In the United States, for the sake of comparison, one can buy an apartment with just 55 salaries on average.
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In Jerusalem there have been hardly any changes in prices, with a four-room apartment in the capital costing NIS 2.4 million ($640,000) on average. But Jerusalem's stable figures do not reflect the major fluctuations in other cities: In some cities prices soared, in others – they plunged.
Significant gaps were recorded in 2012 between new apartments and second-hand apartments. The prices of new flats fell 10% due to the drop in building starts by entrepreneurs, while existing apartments became much more expensive, in some cases by even 50%.
The government occasionally stated that housing prices were falling. Because contractors are forced to sell their apartments, they must show some flexibility when negotiating with clients. In practice, second-hand apartments are more expensive than new apartments, and the victims in 2012 were entrepreneurs and contractors, who were forced to reduce prices throughout the year.
The past year was also characterized by much talk and little action. The Housing and Construction Ministry presented a 15-year record in marketing lands for housing purposes, but the number of building starts dropped.
According to Real Estate Appraisers Association Chairman Ohad Dannus, nearly half of the bids failed or were canceled with no one to build on the land due to the credit crunch and labor shortage.