The stock of unsold apartments held by developers in Tel Aviv and its surrounding cities has experienced a significant increase in recent times. These districts are known for being the most expensive and sought-after in the country. To shed light on this matter, the Central Bureau of Statistics (CBS) has published a new figure that provides segmentation of the supply of unsold apartments by district for the first time.

The CBS data reveals that as of the end of January 2023, the Tel Aviv district accounts for approximately 28% of the unsold inventory of apartments, which amounts to approximately 15,000 apartments. If we take into account the sales rate of new apartments from the previous year, this inventory would last for two years. The central district also has a considerable number of unsold housing units, with almost 13,000 units being held by developers.

In related news on real estate and infrastructure, the Bank of Israel has reported that interest rate hikes have had little effect on the falling apartment prices. Furthermore, the bank has stated that the differences in discounts in the “price for the tenant” are much larger than originally estimated. As TMA 38 ends in six months, an alternative to Shaked is still pending approval in the Ministry of the Interior. Additionally, there is a high-tech park that is growing in the south, which offers an innovative work environment and human capital.

The supply of unsold apartments in Tel Aviv and its surrounding cities has increased significantly in recent times due to the large amount of construction that took place during the boom period of 2020-2021. The two most expensive and sought-after districts are the main contributors to this increase in supply, accounting for more than half of the total supply. Developers are obligated to complete many of these projects due to early pre-sale procedures, but with the current economic crisis and interest rate increases, sales have decreased, leaving developers with an excess of inventory.

The CBS recently published the first figure of its kind, which shows the stock of unsold apartments held by developers, segmented by districts. As of the end of January 2023, the Tel Aviv district holds approximately 28% of the inventory of unsold apartments, which equates to 15,000 units. The central district also holds a large amount of unsold housing units, with almost 13,000 apartments. The figures indicate that if sales rates remain the same as last year, the stock of unsold apartments in Tel Aviv could last for the next two years.

While it is uncertain how many of the apartments that began construction last year will remain unsold, the gap between construction starts and purchases in Tel Aviv is increasing. The decrease in sales is largely attributed to the economic crisis and interest rate hikes, which have impacted the high-tech community that flourished in Tel Aviv during 2020-2021. The decline in transactions has also affected the luxury market, with only 183 luxury transactions carried out in Tel Aviv in 2022 compared to 352 in 2021.

These trends are starting to be reflected in prices, with Tel Aviv pulling the apartment price index down in recent months. While this decrease is not significant enough to indicate a major shift, it suggests that the large supply of apartments accumulated by developers is putting pressure on them to conduct promotions and reduce prices to accelerate the rate of sales.