Even if many new homes are built to higher standards, with underground parking and large balconies for example, the price difference between new and second-hand homes has been closing, according to the Geocartography consulting and market research firm.
In 2008, the average price of new 4-room apartments was 27% higher than second-hand ones, but last year that gap was reduced to just 12%. In Haifa, the gap shrank from 44% in 2008 to 23% in 2013. In Be’er Sheva it narrowed from 46% to 35%, in Kfar Sava from 18% to 12% and in Herzliya from 32% to 11%. In Tel Aviv, Jerusalem, Beit Shemesh and Bnei Brak, however, it actually widened over that period.
“[The narrowing of the price gap] is the result of urban renewal, the sell-off by investors of second-hand homes in attractive locations and the fact that the rise in prices for new homes has been halted in the last year or two,” Geocartography CEO Rina Degani said. “At the same time, the prices for second-hand homes have continued to increase.” Degani said, however, that she expects the gap to widen in the year ahead either due to the advent of pricier new homes or cheaper second-hand ones.
In Petah Tikva between 2008 and 2013, the price difference between new and existing residences went from 20% to 9%; in Ashdod from 18% to 14%; in Rishon Letzion from 27% to 22%; in Bat Yam from 42% to 37%; and in Netanya from 37% to 27%.
Bucking the national trend, between 2008 and 2013 the average gap between new and second-hand Tel Aviv housing went from 6% to 10%. In Jerusalem it widened from 10% to 23%. Degani said the widening price difference in Tel Aviv and Jerusalem was due to expensive new construction that boosted the price of the average new home.
Erez Cohen, former chairman of the Real Estate Appraisers Association, said the data demonstrate the tough conditions that have been created by a shortage of new residential construction.