The supply of unsold homes in Israel has peaked but prices are rising sharply. Why the huge discrepancy? The answer lies in the ongoing war on the Gaza Strip and the aerial bombardment of Israeli cities and towns, according to a report in the Israeli business newspaper Globes.
Housing prices in Israel rose 5.8% between June and July 2023 and the corresponding period in 2024, but the Israeli real estate market after November (after the outbreak of the war on Gaza) last year does not resemble the market before then.
The report expected that real estate prices would continue to rise after 8 monthly increases in the housing price index since last November.
Paradox
According to the newspaper, there is a paradox where prices are rising at a time when the supply of housing is growing, as indicated by the figures of the Central Bureau of Statistics as follows:
- The number of unsold new housing units at the end of last July is estimated at about 69,430 units, an increase of 19% over the end of July 2023, an increase of 47% over the same month in 2022, and an increase of 53% over 3 years ago.
- Not since at least the 1990s has Israel seen such a huge supply of unsold new homes, and yet prices are rising uncontrollably.
Israelis’ Real Estate Preferences Determine Market Trends (Shutterstock)
The newspaper believes that this contradictory phenomenon does not result from a collapse in the effect of supply and demand on prices, but rather from large gaps between the supply of homes on paper and the supply of homes actually required.
Nature of the request
In the case of new housing, the Israelis are mainly looking for those that will be completed soon, and are excluding those that do not have a specific delivery date due to the difficulties of obtaining labor in the construction sector after Palestinian workers were prevented from entering Israeli areas to work following the outbreak of the war on Gaza.
In the case of used housing, the Israelis prefer those with air raid shelters and exclude those without.
