חדרה Leads Israel in Real Estate Deals With 70% of Apartments Sold With Financing Incentives

A recent review of Israel's real estate market, focusing on August data, revealed significant discrepancies between the Ministry of Finance and the Central Bureau of Statistics (CBS) regarding transaction numbers. While the CBS indicated an increase in deals, particularly by contractors, the Ministry of Finance reported a decrease, attributed to its focus on a single month versus the CBS's three-month average. Both datasets suggest June and July were stronger months for apartment sales, with August showing a slight increase over the weaker May. September is expected to be slower due to the holiday season, with October's figures potentially impacted by election period uncertainty.

The Ministry of Finance's Senior Economist Department reported 2,072 apartment sales in August, while the CBS stated 2,027. Galit Ben Naim, Deputy Chief Economist, explained this difference as a minor data adjustment, comparing it to "soldiers' voices" not yet fully processed by the Tax Authority. She noted that a more accurate figure would be available after an updated data file is received.

A prominent finding from the Ministry of Finance's review is the surge in financing incentives, reaching 30% nationally. However, this figure is significantly higher in specific areas, with Hadera identified as the sole city offering such incentives to virtually all buyers, reportedly at 70% of all sales. Some projects in Hadera are offering financing deals, such as a 7/93 incentive on 3-room apartments, which has attracted many buyers. Publicly traded companies' reports indicate that some are selling approximately 70% of their apartments with these incentives, raising concerns about buyers' ability to afford the remaining balance upon project completion.

In Hadera's Park neighborhood, 3-room apartments were sold for around 2.35 million shekels, a price point comparable to 4-room apartments in the same area and even 5-room apartments in the secondhand market. Ben Naim suggested that these incentives might be part of a specific promotion by Aura Israel for members of a large consumer club. Aura Israel reportedly sold a considerable number of apartments in Hadera through this method last month, boosting its sales figures. The company sold 148 apartments across two complexes in Hadera during this promotion, excluding additional purchase requests.

An executive, Atrakchi, recently stated that buyers received a 10%-12% discount, with a gross profit margin of 24% allowing for a 20% profit. Urban renewal companies, he noted, profit more due to lower risk. Ben Naim added that the secondhand apartment market presents an even less optimistic picture than new apartments. The Ministry of Finance reported 4,170 apartment sales in August, a 6% decrease from the previous year and one of the lowest August figures since the early 2000s, leading to speculation about potential market recovery.