Israeli Housing Market Sees Discounts of Up to 20% Amidst High Inventory
Translated & summarized from Bizportal by baba
Israel's housing market is seeing significant price reductions and incentives, with developers offering discounts of 10%-20% on new apartments due to a large inventory of over 84,000 unsold units. Apartment prices have dropped 1.5% in the past year, and high interest rates give buyers more negotiation power. Developers are using promotions, favorable payment plans, and additional benefits to stimulate sales, with potential savings reaching hundreds of thousands of shekels on a 3 million shekel apartment. Buyers are encouraged to negotiate beyond advertised discounts to secure the best possible deal in the current market.
The story in 6 lines · by baba
- Israel has over 84,000 unsold new apartments, enough to cover 26 months of sales.
- Developers are offering discounts of 10%-20%, translating to hundreds of thousands of shekels.
- Apartment prices have decreased by approximately 1.5% over the last year.
- High interest rates and a large inventory have increased buyer bargaining power.
- Developers are using promotions and benefits to stimulate sales amidst slower market activity.
- Buyers are advised to negotiate beyond advertised discounts for the best possible savings.
Israel's housing market is experiencing significant discounts, with developers offering reductions of 10% to 20% on new apartments due to a substantial inventory of unsold homes. As of the end of June, there were 84,280 new apartments available for sale, enough to cover approximately 26 months of sales at the current pace, with over half concentrated in the Tel Aviv and Central districts. Apartment prices have already fallen by about 1.5% over the past year, while interest rates remain high compared to the previous decade. This situation has empowered potential buyers, giving them greater bargaining power than two years ago, leading to discounts that can amount to hundreds of thousands of shekels.
Developers are actively implementing sales promotions to move inventory. For instance, Aura launched a summer campaign offering 10%-12% discounts, along with favorable payment plans and exemption from indexation differences, resulting in hundreds of contracts signed and 431 apartments sold in the third quarter. Similarly, Avissar offered benefits up to 700,000 shekels in various projects, and Hageg provided a unique payment structure in its Tel Aviv project, Infinity, effectively offering benefits around 20% by deferring payments and covering rent for the first two years. These benefits, while not always a direct price reduction, represent substantial savings for buyers.
The willingness of developers to offer such incentives stems from the growing gap between construction pace and sales. Bank credit for residential projects has surged, and many projects are progressing faster than sales. Each month an apartment remains unsold incurs costs for the developer, including interest on land and financing, marketing, and maintenance. While direct price reductions can affect the pricing of other units and raise issues with previously signed contracts, developers often prefer offering additional benefits like deferred payments, indexation exemptions, subsidized financing, or upgrades to sweeten deals without altering the official price list.
Buyers are advised to negotiate beyond advertised discounts, considering the total value of benefits, comparing prices with similar units, and understanding the actual cost. A 10% discount on a 3 million shekel apartment equals 300,000 shekels, while a 20% discount amounts to 600,000 shekels. Buyers with available capital, mortgage pre-approval, and flexibility in move-in dates are in a stronger negotiating position. The current market, with over 84,000 new apartments awaiting buyers, means that the price listed initially is often not the final one, with potential savings ranging from tens of thousands to hundreds of thousands of shekels.