Conflict doesn’t hurt home prices long term

Conflict doesn’t hurt home prices long term, study finds
In Israel, war does not cool the real estate market.

Israel's assault on the Gaza Strip, Operation Cast Lead, lasted from 12/2008 through 1/2009.Once it was over, it took time for the real estate market to recover, there was a six-month slowdown., but once normalcy was restored, people rushed to buy apartments, and prices began to rise.

Between July and August 2006, all residents of northern Israel lived in air raid shelters, during the Second Lebanon War. It had an immediate impact on prices, but it had no long-term effect at all. Israelis are so used to conflicts that for them everything goes back to normal in just a few months.

Governor of the Bank of Israel: Home prices could double in 5 years

Furthermore, He said that it was necessary to deal with the housing supply and bureaucracy.

"Why are we worried"?Stanley Fischer asked:" Because prices are rising by 16%, which means that prices will double within five years. This has to stop. The question is whether it will stop in a way that won't harm the economy,"

Who owns the land?

As much as 93 percent of the land in Israel is either owned or managed by the state is coming under increasing scrutiny as Israel’s population increases and real estate prices keep going up.

In order to keep up with Israel’s population growth and burgeoning real estate market, The Israel Land Administration has to release Tenders for land to companies, who will build new apartments. During the recent real estate boom in Israel, the ILA has not been releasing new land fast enough and at prices that are reasonable enough for Contractors to make money. Consequently, new apartments are not being built at a sufficient enough rate to keep up with demand. Additionally, the planning process in Israel is the most cumbersome in the Western World. Prime Minister Binyamin Netanyahu was quoted this past week as saying that “it takes five or more years to plan an apartment in Israel."

Conflict doesn’t hurt home prices long term, study finds In Israel, war does not cool the real estate market.

The unsettled security situation in the south caught the real estate market at a bad time: a freeze that has lasted for several months, combined with the protest movement. This reality again raised the question whether the security situation affects housing demand and prices. Since the latest clashes are too fresh to draw any conclusions, "Globes" examined previous confrontations. Israel's assault on the Gaza Strip, Operation Cast Lead, lasted from December 2008 through January 18, 2009. Euro Israel Development and Investment Ltd. builds homes in the south. CEO Ofra Hadad told "Globes", "People sold in a panic, lowering asking prices by tens of thousands of shekels, especially in Sderot and Ashkelon, because there seemed to be no solution to the situation. Buyers at that time profited later." Hadad says that once Operation Cast Lead was over, it took time for the real estate market to recover. "After the campaign, there was a six-month slowdown. There were no deals, but once normalcy was restored, people rushed to buy apartments, and prices began to rise," she says. Hadad believes that the Iron Dome anti-rocket batteries have changed the situation. "There's a slowdown," she admits, but believes that "things will get back to normal within days after everything ends." Dr. Danny Ben-Shahar and Dr. Yuval Arbel of the Technion Israel Institute of Technology's Center for Urban and Regional Studies, Dr. Yosef Toubul of the Jerusalem College of Technology, and Prof. Stuart Gabrial of UCLA's Ziman Center for Real Estate carried out a study to see whether the security situation affects home prices. Their findings do not support Hadad's confidence. The study examined the effect of firing on the southern Jerusalem neighborhood of Gilo on home prices there. Between October 2000 and April 2003, Gilo was frequently hit by fire from Beit Jala in the Palestinian Authority. Some apartments were at direct risk, while apartments that were not in the line of fire were nonetheless affected by the conditions. The study found that prices for apartments in the direct line of fire were 8% lower than similar apartments in the neighborhood. The study also found that home prices in the entire neighborhood, and not only for apartments in the line of fire, fell by 10%, and only recovered two years after calm was restored. Ben-Shahar told "Globes" that, at the peak of the shooting, apartment prices fell by 17%. "The riskier areas took longer to recover. Prices recovered 14 months after the shooting stopped." Classified ads site Yad2 CEO Roy Segev told "Globes", "The figures unequivocally show that apartment supply and prices have not fallen since Operation Cast Lead; on the contrary." He believes only a prolonged security crisis can affect prices. "We adapt to everything. Crises pass and things quickly get back to normal." Association of Contractors and Builders in Israel southern district chairman Eli Avisror agrees that real estate in the south is not affected by security incidents. As in the rest of the country, he told "Globes", "Prices jumped after Operation Cast Lead." Sderot is one of the towns that took the greatest number of hits by rockets fired from Gaza. As in other southern towns, the security situation did not stop prices from rising in Sderot. Alex Aviram, a realtor in Sderot for 15 years, told "Globes" that prices for three-room apartments doubled within three years. "Today, the security situation does not affect real estate in the town. Most people have safe rooms." The situation in Gilo is different from southern towns which still face security threats. But Ben-Shahar believes that the results of his study are applicable, and that cities such as Beesheva, Ashkelon, and Ashdod, which take fewer hits from rockets, need less time to return to routine, including home prices. Prices in towns with more incidents, such as Sderot, need more time to recover. Between July 21 and August 14, 2006, all residents of northern Israel lived in air raid shelters, during the Second Lebanon War. ZMH Hammerman Ltd. (TASE:ZMH) marketed homes in Carmiel and Tirat Hacarmel and was building a residential project in Haifa at the time. CEO Haim Feiglin says that the war had an immediate impact on prices, but that it had no long-term effect at all. "During the war, sales ground to a complete stop. Not just at the time, but for months afterwards," he told "Globes". Feiglin says that buyers returned to the company's sales offices after six months, and that prices did not fall. The soaring home prices nationwide did not omit northern Israel. "Five years after the war, and prices are much higher than before it," he says, adding, "Israelis are inured. We've seen a lot, and we know how to get back to normal." Feiglin remembers that there was a strong trend of home improvement after the war, with people moving to homes with safe rooms. "People realized the importance of reinforced rooms when they found themselves unprotected during the war. People were looking for safe rooms. We felt the demand at our sales offices," he says.

Netanyahu admits: There is no land to sell in 2012

"Last year, the Land Administration marketed all the available land inventory for residential construction."
2012 will apparently be a catastrophic year for the marketing of land by the Israel Land Administration. We know this because Prime Minister Benjamin Netanyahu has explicitly said so.

A statement entitled, "FAQs about National Housing Committees Law" lists the advantages of the law and the positive effects it will have on the housing market. One of the questions that the prime minister had to deal with, as his statement puts it, "The opponents claim that there are 160,000 housing units the building of which could begin immediately."

The full answer to this question is, "Not true. There is no substantial planning inventory of state-owned land available for residences. Last year, the Israel Land Administration and the Ministry of Housing and Construction marketed all the available land inventory for residential construction, effectively scraping the bottom of the barrel."

Cutting to the chase, Netanyahu says that the Israel Land Administration has no available land to sell in 2012.

After Israel Land Administration director Yaron Bibi met the government's target of marketing land for 25,000 housing units a year, for two years, there is concern about a severe crisis and risk of another price spiral.

Cabinet approves NIS 100,000 per couple housing grants

The list of places where the grants will apply was also approved.
Arad, Mitzpeh Ramon, Netivot, Ofakim, Sderot, and Yeruham, in the Negev; Acre, Beit She'an, Carmiel, Hatzor Haglilit, Kiryat Shmona, Naharia, Nazareth, Upper Nazareth, Safed, Shlomi, Tiberias and Yefia, in the Galilee. Settlements in Judea and Samaria will be reviewed separately. Although the list of towns is final, it could be subject to revisions after four years, when towns may be added to or relegated from the list

Minister of finance imposes betterment tax on second homes from 2013

The exemption on investment apartments will apply until the end of 2012.
His plan for halting the rise in home prices includes ending the temporary
exemption on betterment taxes in December 2012, in order to encourage real
estate investors to sell second and subsequent apartments before 2013. The
current exemption(of selling up to 3 homes exempt from the tax instead of
only one evey 4 years) applies only in 2011-12.
The second measure aims to convert apartments used for businesses back to
residential use. The minister said:"Currently, 50,000 apartments or more,
mostly in central Israel, are used for businesses by dentists, lawyers, and
so on. We want to provide strong incentives to sell these properties by 2013
by giving a full exemption on the betterment tax," said the minister Israel Tax Authority director general is unimpressed by the above proposed
measure. He said:"I see almost no effect because I don't see these guys
selling their apartments so quickly,"(because the longer they hold on to
their apartments the more they will appreciate in price).