Israeli Home Sales Lengthening, With Sellers Facing Price Pressure
Translated & summarized from Ice by baba
The average time to sell an apartment in Israel has reached a record high of 103 days, increasing pressure on sellers who have already bought a new home. Failure to sell within 24 months can result in significant purchase taxes. While 25% of apartments still sell in under two months, average discounts have risen to 4.8%, and only 8.4% of properties are selling at the asking price.
The story in 5 lines · by baba
- The average time to sell an apartment in Israel has reached a record 103 days.
- Sellers face a 24-month deadline to sell their old home after buying a second property.
- Failure to sell within the deadline results in an 8% purchase tax on the second home.
- Average discounts on apartment sales have increased to 4.8% in recent years.
- Only 8.4% of apartments are currently selling at the asking price.
The time it takes to sell an apartment in Israel is significantly increasing, with current estimates suggesting it takes an average of 103 days, a record high. This extended period puts pressure on sellers, particularly those who have already purchased a new home and face a deadline to sell their old one. Previously, it was believed that 3-6 months was sufficient, but real estate agents now often require at least six months' exclusive listing, acknowledging the difficulty in selling within a shorter timeframe, especially in areas with high inventory.
One major concern for sellers is the tax implications. Under Israeli law, individuals have 24 months to sell their existing home after purchasing a second property. Failure to do so results in being classified as an investor, subject to an 8% purchase tax on the second property. This can jeopardize the transaction and potentially lead to its cancellation, with compensation.
Beyond tax concerns, sellers who cannot offload their property quickly may face financial strain, potentially needing bridging loans or other financing to complete their new purchase. This financial risk can force them to accept lower prices to expedite the sale.
Data from Madlan reveals a consistent rise in the median selling time. In 2022, apartments sold in an average of 74 days. This increased to 81 days in 2023, despite a market slowdown. Projections for 2024 and 2025 indicate further increases to 96 and 98 days, respectively, meaning sellers can expect to take over three months to finalize a deal.
Despite the overall slowdown, a surprising 25% of apartments are still sold in under two months. However, average discounts have also risen. In 2023, sellers offered an average discount of 5.2%, nearly double that of 2022. In the last three years, the average discount has stabilized around 4.8%. Furthermore, the number of apartments sold at the asking price has dropped significantly. This year, only 8.4% of apartments sold at the seller's initial price, a stark contrast to 2022, a peak year when over a quarter of apartments sold at the asking price, reflecting a strong seller's market with minimal discounts.
