Owner of investment giant warns: "More real estate companies on the way to bankruptcy"

"The center of risk in the real estate market is no longer with mortgage borrowers, but with developers and contractors; many of them will not survive this crisis." This is the claim of one of the owners of the Meitav investment house, Avner Stepak.

Stepak spoke about the main challenges in the housing market and their implications for the real estate sector. Speaking at the "Era of Regulation" conference of the Mortgage Consultants Association, Stepak said that, contrary to popular belief, the main problem of the real estate market today is not the interest rate.

"It is less about the high interest rate, that is not the heart of the problem. The problem today is the combination of high apartment prices," he said.

Stepak noted that he does not currently identify the center of risk in the mortgage market, but rather in the development sector. "The risk in my view is less with mortgage borrowers. The main problem is on the supply side - the large loans to developers and contractors, and many of them, unfortunately, will not survive this crisis," he added.

According to him, he is actually optimistic about the interest rate environment in the coming years. "Regarding interest rates and mortgages, I am optimistic," he added. "I think that looking ahead, the interest rate will also drop significantly. On the other hand, small real estate companies are struggling to survive; in the coming quarters, we will see many more bankruptcies and insolvencies."

Matan Shitrit, chief economist of the Phoenix Group, warned earlier this week that "the ability of young couples to purchase an apartment today is very low - not because of the interest rate, but because of the price level, as housing prices have risen in recent years at a much faster rate than the rate of increase in the average household wage."

According to him, "until a few years ago, the question among investors was whether to buy an apartment in Be'er Sheva or Dimona. Today, the question is which instrument or index to enter in the world of investments. Furthermore, under current market conditions, an apartment is not the most profitable product on the investment shelf. The cost of financing is above 4% - higher than the current yield from rent, which stands at about 2.5%-3% at most. Anyone who builds on generating yield from value appreciation needs to ask themselves whether we will see it at all in the foreseeable future."