Israel’s housing market is giving buyers who can afford to wait a reason to take their time.
Home prices in July and August were 1.8% lower than a year earlier, according to the Central Bureau of Statistics. They also fell 0.6% from the preceding June-July period. With sales slowing and developers still sitting on more than two years’ worth of inventory at the current sales pace, buyers in some markets may have room to negotiate a better price.
The slowdown became clearer in the third quarter. Nearly 21,750 homes changed hands nationwide, down 5.7% from the previous quarter, Calcalist reported. By the end of September, about 85,080 newly built or planned homes remained on the market, equivalent to 25.8 months of sales at the prevailing pace. The Tel Aviv and Central districts accounted for more than half of that inventory.
Tel Aviv shows how quickly bargaining conditions can change. Developers sold 537 new homes in the city in the third quarter, down from 1,328 in the previous three months. The number of new homes available for sale in the city rose about 5% over the quarter, Globes reported. The slowdown varies by city. New-home sales rose in Haifa and Petah Tikva over the same period.
Housing Ministry Director-General Yehuda Morgenstern told a builders’ conference in Eilat that he expects home prices to continue falling, although he sees little prospect of a dramatic decline, Ynet reported. He argued that developers could sell homes for less if they lowered what they bid for land. Globes also expects prices to keep easing while sales remain weak and inventory stays elevated, though it identified a sharp interest-rate cut as one development that could shift the market.
Waiting has a cost for renters. Globes reported that rents had risen nearly 4% over the prior year even as purchase prices weakened. The case for waiting is strongest where several comparable homes are competing for buyers and the cost of staying put is manageable. In those markets, the prospect of further modest declines makes it harder to justify rushing to accept today’s asking price.