3,393rd place in the Harish lottery: sometimes the free market beats discounted apartments

For the more than one hundred thousand eligible applicants registered for the 'Apartment at a Discount' program, winning is often seen as a rare opportunity to purchase a home below market value. With rising property prices and high mortgage interest rates, the program has become a vital channel for many. However, not every win guarantees a profitable deal; project delays, cancellations, and shifting market dynamics can quickly erode the intended economic benefits.

A case in point is a lottery held in Harish in May 2023. One participant, who held the 3,393rd position for 115 available apartments, received a notification of a win after others dropped out. The fact that the queue reached such a distant number raises valid questions about the project's overall attractiveness.

A discount on paper

The project by Y.A. Alon was priced at 12,400 NIS per sq. m before VAT (14,632 NIS including VAT). Under program terms, a 20% discount (capped at 300,000 NIS) brought the price of a 100 sq. m four-room apartment to approximately 1.16 million NIS, or about 11,632 NIS per sq. m.

While Tax Authority data suggests this is cheaper than the local average—where second-hand transactions average 12,700 NIS per sq. m and new contractor units average 14,500 NIS—the math changes when considering the timeline. Buying 'on paper' means waiting years for completion. With average rent in Harish at 4,000 NIS per month, a three-year wait adds roughly 144,000 NIS in rental costs.

Furthermore, buyers must account for building input index linkage, air conditioning, and other upgrades. Many 'Apartment at a Discount' projects feature basic specifications and higher maintenance fees due to complex building systems, whereas second-hand units in Harish are often already finished and ready for immediate occupancy.

'The sales market has weakened'

Sagi Eckstein, owner of the 'Nadlan Harish' real estate agency, explains that the local market has shifted significantly. 'The sales market has weakened since interest rates rose, while the rental market has strengthened. The war and reserve duty call-ups have further slowed demand,' he notes. Eckstein adds that in some cases, the prices offered to lottery winners were simply not competitive compared to free-market alternatives, leading many to forfeit their wins.

The Ministry of Construction and Housing stated: 'Prices are determined by Israel Land Authority appraisals, as is standard in all tenders. Tender conditions are public, allowing eligible participants to decide if they wish to proceed. Comparing new program units to second-hand apartments is not always an apples-to-apples comparison, as they differ in characteristics and delivery timelines.'