Tips for Real Estate Investments
It is known that apartment prices are on an alarming rise, it is known that demand is greater than supply, it is known that contractors are facing a sharp increase in construction costs and, above all, it is unknown where this increase is going to hit the breaking point. However, there is no mistake that political efforts are not being made, and here we will examine two moves that have already been launched, moves that seek to influence the real estate picture. You are invited to learn about the purchase tax and the “discounted apartment program”. Did they help, what can we expect next and who, in the bottom line, benefits from this? We went out to check!
The Power of the “Discounted Apartment Program”
If we start with the “Discounted Apartment Program”, we find that just recently (4.22) a lottery was launched for 10,000 discounted apartments, which are spread across 31 localities throughout the country, with additional lotteries on the agenda. The program was launched following that drastic price increase, even following 3 years of political instability. However, those expecting significant changes are destined to be disappointed, because “the power of bureaucracy should not be underestimated” to slow down even such important processes as
At what price do you want to spread the word – apartments at a discount?
The general idea of the “Apartment at a Discount Program” is quite simple. They want to help as many eligible couples as possible succeed in purchasing an apartment, with the ultimate goal being to influence market prices.
Let us explain? Well, once more couples are able to purchase apartments at a reasonable price, it becomes more difficult to apply for new apartments that are on the market at exorbitant prices. Therefore, they chose to put apartments that have not yet obtained building permits up for the lottery, with the understanding that while more couples will have to wait to realize their dream, at the same time more couples will realize that there is a large stock of discounted apartments, so it is worth waiting. It is also interesting to note that some of the apartments are not only on the fringes, but also in Tel Aviv-Yafo there are several dozen apartments. Is that true? Well, some of the apartments participating in the current lottery are left over from the previous program, the “Price for the Tenant” program.
What do contractors think about a discounted apartment plan?
Contractors in the field indicate that the current plan is considered good, for several reasons. First, it is a discount measured at around 300,000 NIS. An amount that is both significant and leaves room to generate profit. Second, they are careful that each lot will benefit from a different beneficiary, so there is no fear that a monopoly will be created, meaning that the healthy competition between developers is expected to lead to a welcome slowdown in price increases.
How effective is the purchase tax increase plan?
In November 2022, a purchase tax for people making real estate investments was recorded at 8%, with the goal here also being to calm the situation in the market. This move led to a calm moderation, with the cities where the most new apartments were purchased being Tel Aviv, Bat Yam, Jerusalem, Netanya Rishon Zion, Ramat Gan and Beit Shemesh – in that order.
Bottom line – Real estate situation
However, raising the purchase tax is not expected to significantly affect the situation, because people understand that investing in real estate is the best investment as of today. Also, many are afraid to postpone purchasing an apartment – they are afraid that prices will only continue to climb, so they are willing to absorb the tax increase.
Hence, although it is possible to enjoy a cooling in demand for a period of time, this is not a step that can be relied on. It should also be understood that we Israelis do not believe in renting and therefore are looking to purchase an apartment, even if it is an expensive expense. In addition, people understand that an apartment is an ideal asset for investment, and since the situation is not really going to change in the coming years, demand is expected to continue to be high, also in light of the involvement of the two current moves
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