Rising Real Estate Prices Amidst Unprecedented Supply in Israel
The Israeli real estate market is experiencing a perplexing situation where housing prices are sharply increasing despite a record number of unsold homes. A report from Globes, an Israeli business newspaper, reveals that housing prices rose by 5.8% between June and July 2023 and have continued to escalate into 2024. This trend has been particularly pronounced since the outbreak of the war on Gaza in November 2023.
The Central Bureau of Statistics has reported that the number of unsold new housing units reached approximately 69,430 by the end of July 2024, marking a 19% increase from the previous year and a staggering 53% increase over three years. This unprecedented supply of unsold homes has not been seen since at least the 1990s, leading to a significant paradox in the market where prices continue to rise despite ample supply.
Factors Driving the Discrepancy in Housing Demand
The report suggests that the ongoing conflict has drastically altered the dynamics of the real estate market. The demand for new housing is predominantly for units that can be completed in the near future, largely due to labor shortages caused by the ban on Palestinian workers from entering Israeli territories. This situation has led to a preference for homes with specific delivery dates, leaving many projects stalled and unoccupied.
Additionally, buyers in the used housing market are increasingly favoring properties equipped with air raid shelters, a direct response to the heightened security concerns stemming from the conflict. This shift in preferences highlights the impact of the ongoing war on the housing market, creating a gap between the available supply and the actual demand for homes that meet the needs of buyers in a conflict-affected environment.
