No one knows
Between developers promising price increases and CEOs reporting a 20% drop, Israelis are left without a compass. In the current reality, the answer to the question "should I buy now" depends mainly on the interest of the person advising you.
"I would love to know when it is expected that apartment prices will return to rising, because it seems that real estate is collapsing. What do you recommend? To wait or to buy? We are after a wedding and we must have an apartment." This question, bordering on a plea, was written by an anonymous user in one of the hundreds of online groups dealing with real estate. In two short sentences, one can find the essence of the atmosphere in the industry in recent months: complete uncertainty and a deep fear of the future.
Will prices return to rising or are they collapsing altogether? Is it time to buy? The last few years have changed axioms that the general public, contractors, and developers find difficult to accept. Apartment prices, which we were accustomed to seeing only rise, have changed direction, and the industry, after almost three years of war and crisis, is beginning to digest this shift. It is important to note: there is no stagnation in residential real estate; transactions are happening, and thousands of apartments are sold every month, as seen in reports from the Central Bureau of Statistics and the Ministry of Finance. However, sales volumes are much lower than in the last decade. The market is changing, a significant part of the public is waiting on the sidelines, and real estate companies are trying to navigate the new reality, but no one really knows what will happen.
Urban renewal in the new reality
It is impossible to discuss residential real estate without referring to urban renewal, such as Pinui-Binui (evacuation and construction) and TAMA 38, which will continue to accompany us for many years. The volumes of renewal today are significant, and in some cities, they are beginning to constitute the bulk of new construction. When looking at the backlog of projects planned by various companies, the numbers are massive. However, it is not certain that all players in this field have internalized the new reality.
For many years, the industry was accustomed to complaining that urban renewal projects had marginal economic viability, but rising apartment prices eventually made them profitable by the time of realization. Today, we are in a different reality where the numbers in these projects no longer add up. Consequently, some developers are delaying the start of construction or the issuance of permits, a trend reflected in Central Bureau of Statistics data. Other developers are renegotiating contracts with apartment owners—a phenomenon that is no longer marginal. A tenants' lawyer recently stated at a real estate conference that more than 80 projects he is accompanying are at exactly this point.
Regulators are also beginning to speak in different tones. The Government Authority for Urban Renewal is discussing the need for planning flexibility to cope with the decline in housing starts. Simultaneously, statements are being heard that we have not heard in the past regarding apartment owners: thoughts about reducing benefits and even suggestions from Ministry of Finance representatives that those who enjoy future profits in a real estate project should perhaps also share the risk. Is this a casual statement or the beginning of a new approach? Time will tell.
The fog of war and vested interests
Let's return to the uncertainty mentioned at the beginning. Everyone is looking for answers: companies, developers, contractors, potential buyers, and those who have been trying to sell an apartment for a long time without success. This "fog of war" is fueled by a plethora of statements that cannot be ignored:
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On one hand, some developers broadcast "business as usual" and claim prices are not falling.
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On the other hand, the CEO of a large real estate company stands on a stage and says that apartment prices have fallen by 20% in recent years.
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On the third hand, the Director General of the Ministry of Construction and Housing talks about prices that are falling and will continue to fall.
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On the fourth hand, more experts from the capital market are shining a spotlight on price declines.
It is important to remember two things: 1. No one knows what will happen. 2. Everyone has an interest. The volume of discourse, especially on social networks, is enormous and devoid of filters. There is no single truth, and it is difficult to distinguish fact from fiction, especially as AI gains momentum. This is a period when information consumers must exercise judgment and ask what interest lies behind the words and the speaker. Most importantly, do what is right for your household and your bank account. In the end, you will pay the mortgage, not them.
