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Writer's picture יהודה אברון נכסים

The real estate market and its importance in the Israeli economy


The real estate market in Israel is one of the most important factors for the country's economy

This area is a major lever for the Israeli economy, affecting a wide range of variables.


The economic effects in the real estate market in Israel

The effects on the real estate market are evident in economic growth, job and employment creation, financial stability and property security. It also affects property prices, consumerism, and its many connections with other areas of the economy. Because of its great influence, the real estate market receives special attention from the state and the fields of business, and becomes a central issue in the political and economic field.


economic crises

Economic crises are an inevitable phenomenon in the economic world, they both decrease and lead to growth, and they affect a wide variety of areas such as employment, exports, consumerism and above all - the real estate market.

When economic crises occur, these are moments of uncertainty that cause us to re-examine the economic processes and mechanisms around us. Economic crises may be the result of external events, such as war or a global crisis, the corona crisis we experienced in 2020. Such crises lead to a break in economic activity, an increase in work from home and to reduce consumer activity.



Selling an apartment or buying an apartment

Selling an apartment or buying an apartment in economic crises

There are differences between the impact of temporary and long-term crises and we need to adjust our strategies and business decisions accordingly. Long crises such as financing crises or global economic crises affect the market over time and can make it difficult to make decisions in the future as well. In such crises, the economic phenomenon continues for a long time and often leads to more difficult results and structural changes in the real estate market, this is because in long crises, there can be a fear of a lack of economic outlook even in the long term, which can affect decisions to buy or sell properties. Temporary crises, Like eviction crises or banking crises can lead to a short and consistent drop in real estate prices.

For a short time, the spread of the crisis and the fear of the economic situation can lead to a lack of demand and a decrease in real estate prices. This is because during these periods, property owners may focus on maintaining their properties and avoiding selling at too low prices.




The effect of the war on the housing market in Israel

One of the most significant economic crises in their influence is war

The State of Israel is accustomed to wars which, in addition to their severe impact on the daily lives of the residents, can also directly affect the real estate market. Property maintenance and the construction of postponed projects, the purchase of properties at exorbitant prices and changes in real estate prices may occur as a result, which can affect the value of the properties and on market activity.


plagues

Another type of crisis is epidemics. The corona epidemic that spread in Israel in 2020 caused fundamental changes in the real estate market. The closures and government restrictions caused a break in economic activity, and as a result we saw a decrease in buying and selling activity in the real estate market. The feeling of uncertainty and fear of the economic future caused many to slow down in making purchasing or selling decisions, which caused a decline in real estate prices.


A sense of uncertainty in real estate

The difference between the center and the periphery

It should be noted that the impact of crises on the periphery and the center may be different. During times of crisis, the periphery may remain relatively more stable compared to the center, when real estate prices may fall less in areas that are considered less sought after or less maintained. In addition, properties in peripheral areas may be less common for decision makers, so the impact of the crisis on them may be less particularly felt .

During the government closures and restrictions, most real estate transactions stopped, and prices dropped throughout the country. In the center, which is the center of business and tourist activity, we saw a dramatic drop in real estate prices and purchasing activity.

Conversely, in peripheral areas such as small settlements and popular areas, the level of changes was relatively lower. Since investments in real estate in the peripheral areas are usually made against the background of a desire to live in a reasonable quality at relatively low prices, the role of real estate in the crisis was less serious for the residents of the periphery, who already receive a relatively low cost for the properties there.


Projects - impact of the real estate market crisis

The crises do not only affect sellers and buyers, but also real estate entrepreneurs who have a high level of risk, are in a difficult situation during periods of economic crisis. Difficulties in obtaining credit and financing, a decrease in buying and selling activity. Their ability to sell existing properties at high prices and receive good profits may be impaired In times of crisis, therefore, real estate entrepreneurs are forced to be more stable and efficient in managing their projects, and to focus on markets and types of assets that offer the ability to deal well with market conditions.

What is the right thing to do during an economic crisis?

It is correct to respond to economic crises also through a personal perspective, and in the case of apartment buyers this can be expressed in several ways. In times of crisis, home buyers look mainly at options for a smart purchase and future financial stability. Thus, it is right for them to focus on purchasing properties at relatively low prices, but also on the quality and location of the properties. Buyers can prefer properties in potential areas that are expected to develop and rise economically in the future.



Here are some steps to help you:

  1. Checking personal financial situation: Real estate is a big investment, so it is important to check your financial situation. This includes checking debts, savings and ability to pay credit costs.

  2. Monitoring market trends: Track prices and trends in the real estate market. Understanding how the economic crisis affects prices and market trends can help you make informed decisions.

  3. Consultation with a financial expert or real estate advisor: Get help from a financial expert or real estate advisor who can assess the situation and recommend appropriate steps.

  4. Checking financing options: Check different financing options and make a comparison to find the most suitable offer for your financial situation.

  5. Opening a savings or compensation fund: it is important to make sure to have savings or a compensation fund that can be significant for the future such as in cases of economic crisis.

  6. Focusing on relatively stable areas: in an economic crisis, there may be areas where property investment will be relatively more stable than others. Focus on searching for properties in such areas


opportunities

Economic crises are not only threats, but also offer opportunities. In the short and long term, they may create new opportunities and change the configuration of the real estate market in Israel. In Israel, the real estate market is diverse and dynamic, so the impact of the crises on it also offers special challenges and unique opportunities.



Opportunities in the real estate market

Renting an apartment or selling an apartment - which is better?

At the end of the day, the effect of economic crises on the prices of real estate for rent and sale depends on several factors, so the impact of each of them must be taken into account. For example, the scope and severity of the crisis that may affect the length of time that there will be an impact on real estate prices. Smaller economic crises may cause temporary and local damage to real estate prices, while larger crises may cause more spatial and impressive changes in the market.

Generally, during times of crisis there is a decrease in real estate prices, including rental and sale, when the consumer is in a convenient place to obtain apartments at lower prices while the owner of the properties tries to avoid selling at too low a price. This phenomenon may lead to growth in the rental market, when a decrease in real estate prices It leaves more options for people to rent apartments at lower prices. Therefore, there may be opportunities to purchase properties at lower prices than usual. Another example, the production of loans under good conditions, economic crises may lead to discounts on loan interest rates or to increase the availability of loans, which can make it easier.


In conclusion, the impact of economic crises on the real estate market in Israel is a fascinating phenomenon that requires flexibility and financial stability from us. These crises are not only threats but also offer new opportunities to those who know how to take advantage of them.
I invite you to contact me with any questions or demands you may have. I am ready to provide you with a professional, personal and efficient service in order to help you deal with the impact of the economic crises on the real estate market and to offer you suitable and customized solutions. I am here to help you achieve your financial and real estate goals and to ensure that you go through the purchase process or Selling smoothly and safely. Do not hesitate to contact us today and I will be happy to be at your disposal at any time.



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