Real estate developers are currently alarmed by a new curve that has appeared on their graphs – the relationship between the number of apartments still remaining to be sold at the end of a particular month and the number of apartments sold in that month. The curve strongly illustrates the intensity of the crisis that the real estate market is currently going through, as it begins to resemble a market in recession.
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The curve is in the shape of a u and can be clearly seen on graphs published by the Central Bureau of Statistics showing how many months it takes for a new apartment to be sold.
The larger the number of apartments left for sale at the end of the month and the smaller the number of apartments sold clearly indicates that developers are having difficulty selling the apartments they have in stock.
In 2020, about 41,000 new apartments were sold, a similar number to 2019, despite the Covid pandemic and repeated closures. The amount of time it took to sell a new apartment fell from an average of 19.6 months at the start of 2019, to 10.9 months at the end of 2020.
In 2021, new apartment sales skyrocketed to 58,000, an all-time record. As a result, the average time it took to sell a new apartment fell to just nine months. However, since the end of 2021, several months before the interest rate hikes began – sales of new apartments began to fall rapidly, and it looks as though 39,500 new apartments were sold in 2022, down 30% from 2021.
Consequently, within 18 months, the average amount of time it takes to sell a new apartment has risen sharply from 10.9 months to 19 months, similar to 2019 – thus completing a u shape curve on graphs between 2019 and 2022. This poses a dilemma for developers of how to continue selling apartments while cutting prices by the minimum. The most recent Central Bureau of Statistics figures showed new apartment prices falling by 2.4% within one month.
Published by Globes, Israel business news – en.globes.co.il – on February 9, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.
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