Are Israel Real Estate Prices on the decline?
That is the question that is on many people's minds right now. The tent protests in Israel over the last few weeks seem to have put many potential buyers on stand-by mode.
I think the correct way to analyze this question of declining price possibilities is to separate your analysis into 2 categories:
The first category would relate to normal market forces:
Are high prices in and of themselves forcing a slowdown in the Real Estate Market? If in fact high prices are playing a role in the current slowdown, then what are the market forces that will come into play as things begin to pick up again? Is the demand all of a sudden diminished because people are unwilling to pay the current prices? Is the supply of both new and second hand apartments going to grow and consequently Sellers will have to compete with more listings on the market? We don't know the answer to these questions yet.
The second category would be how much the tent protests will really affect market prices:
The recent protests in Israel about the affordability of housing have certainly caught the attention of the Government. The Prime Minister and others in his government have acted to attempt to correct the insane bureaucracy that currently dictates that the Development Process moves at a snail's pace. The reality is that the changes that have been made by the Israeli government will not be felt by the Real Estate market for at least a few years. Regarding the ongoing tent protests, I would suspect that as soon as the Press stops covering their efforts and their plight, that the movement will lose steam and die out.
So where does that leave us? When the protests die down, we will once again be left with the "market forces" being at work. My personal opinion is that we will begin to see kind of a roller coaster effect, as opposed to a downward spiral. There will always be those who have to sell right now and those who want to buy right now. The others will either take their properties off of the market or will postpone their purchase.
By: Lyle Plocher
August 9, 2011
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