Big investors leaving Israel’s real estate market

Investors who buy large numbers of apartments are leaving Israel’s real estate market, according to an August 2024 survey conducted by the Finance Ministry’s chief economist. The survey found that although until recently these large investors completed most of the deals by investors, in August they made up 33% of all investors who bought apartments.

The chief economist found, as did the Central Bureau of Statistics in its recent review, that in August there was a significant 16% decline in the number of transactions, compared to previous months. According to the chief economist, 7,514 apartments were purchased in August, of which 6,811 were on the free market and the rest were in government-subsidized programmes; 60% of purchases were made by young couples, 24% by buyers moving up the housing ladder, and 16% by investors.

The chief economist found that Tisha Bav, which fell this year on August 13 (it fell in July last year), contributed to the decline in the number of deals, because some members of the public tended not to sign contracts in the previous days. To fast.

The chief economist found that over the past year, about 1,200 apartments were purchased by investors although this represents half the number bought in an average month in 2021.

One interesting finding within this indicates a significant change in the mix of real estate investors and a decline in the proportion of “heavy” investors who have at least one apartment to invest in, including “apartment collectors” (owners of three or more apartments). Over the year preceding April 2024, the proportion of “heavy” investors was 62% – 72% – 67% of the total number of buyers of investment apartments, while since May 2024, this proportion began to decline and was only 35% in August. The percentage of those with three or more apartments fell from 36% to 42% in 2023 and the first four months of 2024, to only 17% in August.

There are several possible explanations for this. The first is that “many” investors are looking for alternative investments these days, due to the uncertainty surrounding the Israeli economy. The second explanation is the conversations that have taken place in recent months about changes to the purchase tax – perhaps raising it to increase state revenues, or reducing it to encourage more transactions and thus increase state revenues as well.

Another explanation is the lower number of “buy now, pay later” deals by investors for homes still under construction due to fewer offers from developers. The final possibility is that “heavy” investors do not believe that apartment prices will continue to rise at the current rate, while the war is hitting the economy hard, and rental prices are rising, but not at a rate that makes purchasing residential property crucial. Apartments are more feasible for them.

Published by Globes, Israel Business News – en.globes.co.il – on October 13, 2024.

© Copyright Globes Publisher Itonut (1983) Ltd., 2024.