A decline in apartments sold was felt all over the country in the first quarter with a 15% drop in sold apartments from the last quarter of 2012 to the first quarter of 2013 according to the Central Bureau of Statistics. Statistics reflect Hadera to Beer Sheva, where there was a 27% drop. This statistic differs from my April 23rd post which also included housing starts bringing that figure to 20% from the prior quarter.
Most affected by the current real estate market are young couples and young adults where sellers still hold on to high rental prices as well asking prices for sales. The young demographic is choosing to remain at home, living with parents. High real estate prices and the austerity measure of 40% down payment required by the bank of Israel are the main cause.
In Israel unemployment levels are healthy at about 4.5% but the basic salaries for those entering the job market are hindering affordability to young people. Young adults and parents here are choosing to wait out the trend downward hoping for lower prices as well as a change in government policy making housing more accessible and affordable. Traditionally parents in Israel will help their children to purchase, but wary parents are also looking for a decline in prices and required downpayments.
A similar situation can be found in the United States but has been created for different reasons, housing and rental prices are still affordable in most major US cities but the lack of even minimum wage jobs is causing a staggering 85% of college grads with bachelor’s degrees to return home to live with parents according to Time Magazine study. Of these grads 54% are unable to find work and instead move on to higher degree education hoping to be in a better position while waiting for economic recovery.