Buyers Throng National Housing Fair, but Quail at Prices

Government is not genuinely tackling supply issue, charges veteran builder.

The National Housing Fair at the end of last week did not go as well as property developers had hoped. The problem wasn't attendance: It was thronged. Thousands of people attended - if anything, more than came to last year's fair (held in May ), say the organizers. But participants seem to have expected the summer protests over the cost of living - and possibly the signs of economic slowdown - would lower housing prices. That has not happened, at least with respect to apartments in central Israel. If they fell at all, it was by a few percent.

A young family seeking a four-room apartment for a million shekels, NIS 1.1 million at most, could find a solution in Haifa, Hadera, Ashkelon, Kfar Yona or Rosh Ha'ayin, but nowhere in the greater Tel Aviv area or the Sharon region.

This year's housing fair featured developers building in the periphery, and some city leaders from the Galilee and Negev also attended, including the mayors of Acre and Migdal Ha'emek.

"For this fair, we completely changed our approach, in part because of the social-justice protests in the summer," said Eran Rolls, chairman of the Israeli Building Center, among the organizers of the annual housing fair.

"We realized that we had only been marketing projects in the center of the country. This time, we brought projects from the periphery, the Galilee and the Negev too."

Israelis could buy a home starting at NIS 650,000 in the Negev and starting at a million shekels in the north, Rolls added.

He feels the change in approach vindicated itself, from the perspective that attendance at the fair was double the level of previous years.

But the young couples attending the fair evidently did not share his satisfaction. Zohar and Ronny Kasharo, who live in Holon, came with their three small children. They were looking for a five-room apartment for NIS 1.5 million in the center. Nothing doing.

"We rent," Zohar said.

While the fair offered plenty of variety and was interesting, they'd hoped the sellers would be more flexible about prices. They weren't, he said. "I don't think we'll be able to buy a home for the time being," he added.

He does sense a slight dip in prices, but no more. "I had expected a five-room apartment in Holon to go back to NIS 1.3 million or NIS 1.4 million, like it was two or three years ago, before this bubble was created," Zohar said.

Potential buyers also complained about the almost complete absence of three-room apartments on offer. Developers have been focusing almost exclusively on bigger ones.

At least the representatives of the development firms took heart from the high attendance. The last several months have been hard on Israel's builders.

"We don't see a connection between the housing fair and the social protest that happened," said Yossi Prashkovsky, veteran builder and chief executive officer at Prashkovsky Investments, a housing construction company listed on the Tel Aviv Stock Exchange.

He feels that the sheer numbers mean people want to buy homes: "I can't remember the last time so many people came to the fair," Prashkovsky said.

Yet just last week, the Central Bureau of Statistics published information indicating that demand for housing has diminished, while supply has handily increased.

How does Prashkovsky explain that housing prices aren't trending downward? He explains it by his sense that demand has not diminished in the slightest. "Demand is rigid, mainly by young families and people seeking to improve their standard of living," Prashkovsky said. "They waited two or three months to see if anything would change; but the increase in supply isn't massive. At the end of the day, we aren't seeing the state releasing huge amounts of land for development in the center.

"Out of 5,000 planned housing units on land being offered in Israel Lands Administration tenders of late, there were 1,000 in Rosh HaAyin, another 300 in Shoham and the rest in the distant north and south of the country. At the moment, the government is not really tackling the supply issue. Until it does, we won't see any real change in the market."