Real Estate Prices Down 15% Due to Developer Tactics, Expert Says
Translated & summarized from Behadrei Haredim by baba
Real estate prices in Israel have seen a real decline of 10% to 15%, according to developer Yaki Reisner. He stated at a conference that contractors are offering incentives instead of lowering official prices to avoid financial reporting issues. Experts advise buyers to calculate the cash value of benefits and use the actual price drop as leverage in negotiations.
The story in 5 lines · by baba
- Real estate prices have already dropped 10% to 15%, developer Yaki Reisner revealed.
- Developers offer incentives instead of lowering official apartment prices, Reisner explained.
- This tactic avoids negative financial reporting to banks and lenders.
- Experts advise buyers to calculate the cash value of all incentives.
- Buyers have increased negotiation power due to the actual price decrease.
Real estate prices in Israel have already fallen by 10% to 15%, according to real estate developer Yaki Reisner. Speaking at the 'Tevuna for Economy' conference, Reisner explained that developers are masking this decline by offering incentives and upgrades worth hundreds of thousands of shekels, rather than officially lowering the listed price of apartments. For example, instead of reducing an apartment's price from 2 million shekels to 1.85 million, developers might offer a 150,000 shekel 'gift' or subsidized mortgage.
This strategy is driven by financial obligations to banks and financing funds. An official price reduction would force developers to report a decrease in asset value on their financial statements, potentially tightening credit terms and signaling weakness to the financial system. By keeping the official price high and providing discounts through various benefits, they circumvent these reporting requirements.
Experts from the organization 'Tevuna' advise potential homebuyers to critically assess deals. They recommend converting the monetary value of all offered benefits, such as interest subsidies or kitchen upgrades, into cash. Buyers should understand that the true price is already lower and use this as a basis for negotiation. They also caution against deferred payment schemes, urging buyers to verify the total cost of financing and indexation until key handover.
'Tevuna' experts emphasize that with prices already falling, buyers have increased negotiation power. They encourage buyers to demand that unnecessary benefits be converted into actual cost reductions, like exemptions from indexation or contributions to legal expenses. The organization provides contact information for further financial guidance.