New home sales in July weakest since 2018

2,375 new homes were sold in July, the Central Bureau of Statistics reports, the weakest July since 2018. Only April (which had the Passover and Independence Day holidays) and May were weaker this year. Developers are left with 60,000 unsold new homes, a similar number to a full year of building starts. The number of homes sold in July was down 37% from last year and 46% from 2021.

The problem facing real estate developers is that they made their calculations for the current market based on 2021-2022 data, and therefore began the construction of many projects. 2023, on the other hand, returns them to the sales data of 2018-2019, which were considered to be lean years for the industry. Consequently, the stock of apartments that they own is increasing every month. Of the 60,000 unsold new homes, over 18,000 apartments are in the Tel Aviv District, and 14,000 apartments in the Central District.

Buying less in Tel Aviv

These figures support the data from the Ministry of Finance chief economist, which show significantly less housing deals being concluded, especially in Tel Aviv, alongside accelerated building there, especially in urban renewal projects. It can be assumed that one of the main reasons for this is the inability of many to afford the high apartment prices, in today’s high interest rate environment.

This is also reflected in the table of the leading cities for the sale of new apartments. Tel Aviv, was only ranked fifth in apartment sales in May-July 2023, with 358 new apartments sold there. In total, about 100 new apartments are purchased in the city each month, compared with 160 apartments sold last year, and 330 in 2021.

The leading city for the sale of new apartment between May-July 2023 was Rishon Lezion with 532 apartments, followed by Sderot (495), Jerusalem (405) and Ashkelon (364).

The market situation is even worse, if the subsidized apartments that are sold as part of the government’s Buyer price program are deducted from it. About a quarter of the 17,000 new apartments purchased in the first seven months of the year were such apartments.

Published by Globes, Israel business news – en.globes.co.il – on September 14, 2023.

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