After months on the fence, buyers are looking to return to the real estate market after their hopes of receiving a discount under Finance Minister Yair Lapid’s flagship plan went up in smoke last week.
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Lapid had announced a plan to exempt some first-time homebuyers from VAT on newly built homes in March, and that plan had been credited – or blamed – for chilling Israel’s real estate market to some degree, as would-be buyers decided to wait and see whether the plan would be enacted into law. But that changed last week when Netanyahu disbanded the coalition and fired Lapid.
On Friday, thousands showed up at real estate sales offices, particularly those marketing new developments whose homes would have been eligible for Lapid’s discount.
Roni Cohen, CEO of Eldar Marketing, which is responsible for sales for 70 projects around Israel, said the company’s sales centers in Rosh Ha’ayin, Be’er Yaakov, Or Akiva, Yavne and Harish saw some 1,000 potential customers.
Since last Tuesday, when it became clear that Lapid’s plan was halted, the sales offices have been seeing extremely heavy traffic, said Cohen. The number of visitors on Friday was a record for the past six months.
Eliahu Cohen, head of marketing at Dona, said some 500 people showed up at sales offices in Ashkelon, Harish and Rosh Ha’ayin over the course of five hours on Friday. Other marketing managers reported equally brisk traffic.
Meanwhile, another plan championed to ease home prices whose fate was tied to that of Lapid’s zero-VAT plan may actually be getting underway regardless, albeit to a more limited extent than planned. The so-called target price plan, which had been put forward by the Housing and Construction Ministry, had called for selling state land to contractors who agreed to sell homes at a discount. Previous decisions had stated that this plan would get underway only once Lapid’s zero-VAT plan was legislated.
On Sunday, the Finance Ministry announced that the target price plan would get underway anyway, although homes sales would be targeted mostly at first-time buyers.
Last week, treasury officials had stated that they saw no reason to unlink this program from the zero-VAT plan, meaning it would essentially be shelved as well.
In the announcement, the ministry stated that some 70% of homes built under the target price plan would be slated for first-time buyers, while the remainder could be bought by homeowners or investors. Homes would be priced at up to 1.9 million shekels, down from 2 million shekels in the previous plan.
Previously, the plan had not called for giving preference to first-time buyers, which made Finance Ministry officials fear that most would be sold to more established homeowners or investors, who generally have more financial means than first-time buyers.
In a meeting with the Finance Ministry budgets director, representatives of the Israel Lands Authority budget division, the Housing Ministry director general and the chairman of the National Economic Council agreed on these changes to the plan. The changes are pending an opinion from the attorney general as to whether these types of changes can be made to a cabinet decision at this time, when the country is preparing for an election.
Under Sunday’s decision, homes were to be allocated based on lottery.
Contractors participating in the program will have to commit to sell homes for some 20% under the current market price.