Experts Urged Stock Market Investment Over Real Estate; Here's What Happened
Translated & summarized from Ice by baba
Financial experts advised investing in the stock market over real estate, predicting housing price drops. However, housing prices have seen minimal decline while major stock indices have fallen significantly. Yehuda Morgenshtern, Director General of the Ministry of Construction and Housing, has made seemingly contradictory statements regarding land tenders and housing prices. A new tender for discounted apartments has opened, with the author suggesting potential profits for buyers in peripheral cities.
The story in 5 lines · by baba
- Stock market indices have fallen significantly, while housing prices have seen only a minor decrease.
- Experts who advised investing in the stock market may have caused significant losses for investors.
- Housing prices have risen 3.7% under the current government, contrary to expert predictions.
- Yehuda Morgenshtern's calls for lower developer bids are questioned due to state land pricing policies.
- A new tender offers discounted apartments, with potential for significant profit for buyers.
Months ago, financial market professionals urged the public to invest in the stock market, predicting a collapse in housing prices. This campaign, featuring prominent figures in finance appearing on television, claimed housing prices would drop by 20% to 50%. While a significant crash in housing prices has not materialized, with prices only falling 0.4% in the last three indices, the public's perception has shifted. In contrast, major stock market indices have seen substantial declines: the TA-35 index fell 7.1%, the TA-90 index dropped 8.7%, the TA Real Estate index decreased 9.8%, and the TA Construction index plummeted 11.3%. The article highlights that an investment of 2.4 million shekels in the stock market in August, based on expert advice, could have resulted in significant losses, potentially requiring a new loan to cover the deficit.
Yehuda Morgenshtern, Director General of the Ministry of Construction and Housing, has made two key statements that the author finds contradictory. First, he is urging developers to submit lower bids in Israel Land Authority (ILA) tenders to enable lower future apartment prices. However, the author points out that land costs are a significant component of apartment prices, and the ministry he heads, along with the Ministry of Finance, has been issuing contradictory signals about demand and land prices. The author questions why the state doesn't lower minimum tender prices and development costs if it claims not to seek profit from land sales. Second, Morgenshtern claims a failure in the rental market, yet the author questions the expectation of falling housing prices without a clear explanation.
Additionally, a new tender for discounted apartments for those looking to upgrade their homes has opened, with apartments available in cities like Haifa, Beit She'an, and Dimona. The author finds the concept of upgrading to peripheral cities questionable but notes attractive prices in Haifa, potentially offering a profit of over a million shekels per apartment. The article concludes by suggesting that discounted apartments are detrimental to the housing market and that even those seeking a first home could benefit from purchasing in Beit She'an or Dimona at current prices, anticipating future gains, or alternatively, investing in the real estate index.