Contractor Financing Deals Surge as Apartment Sales Decline
Translated & summarized from Mako by baba
Apartment sales in Israel fell by 21% in September, reaching multi-year lows. In response, contractors are offering financing incentives at the highest rate in 18 months, with 45% of free-market sales including such benefits. The Bank of Israel is considering new regulations as these incentives become more prevalent. Investor purchases also saw a sharp decline of 29% year-over-year.
The story in 5 lines · by baba
- Apartment sales in Israel dropped 21% in September, reaching multi-year lows.
- Contractors are offering financing incentives in 45% of sales, the highest rate in 18 months.
- The Bank of Israel is reviewing new regulations for contractor financing benefits.
- Investor apartment purchases declined by 29% in September compared to last year.
- Over 85,000 unsold apartments remain in the inventory of contractors.
Sales of new apartments in Israel dropped by approximately 21% in September compared to August, according to the Central Bureau of Statistics (CBS). This decline marks one of the lowest transaction volumes in the free market since the early 2000s. In response to the slowdown and a substantial inventory of over 85,000 unsold apartments, contractors are reintroducing financing incentives, a practice previously curbed by the Bank of Israel.
Data from the Ministry of Finance indicates that financing benefits were offered in 45% of free-market apartment sales in September, the highest rate in about a year and a half. These incentives typically involve buyers paying a small portion upfront and deferring the rest until delivery, or the contractor covering interest payments. This represents a significant jump from the 30% rate observed in August.
Regions like Hadera saw financing benefits in 74% of contractor sales, while Beersheba experienced a rise from 22% to 58%. The Ministry of Finance noted that the widespread nature of these incentives suggests a broad market trend rather than a localized phenomenon. The Bank of Israel is currently reviewing new regulations as the current temporary measures restricting such benefits are set to expire at the end of 2026.
In the city of Ofakim, a notable example of this trend, 89% of the 129 free-market apartments sold in September included financing benefits. The average price for these apartments was NIS 2.05 million, significantly higher than government-subsidized apartments in the same area. Overall, sales of new, non-subsidized apartments fell by about 22% in September compared to August, with only around 1,750 units sold. Second-hand apartment sales also saw a considerable drop, reaching some of the lowest September figures since the early 2000s.
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