Apartment sales in July plummeted 27% from a year ago, new figures show

With just 6,912 units sold, Finance Ministry review determines total lowest for July since economic recession during 2002 intifada; first-time home purchases recover slightly

Illustrative: Construction of new residential buildings on Allenby Street in Tel Aviv, May 21, 2023. (Miriam Alster/Flash90)
Illustrative: Construction of new residential buildings on Allenby Street in Tel Aviv, May 21, 2023. (Miriam Alster/Flash90)

The number of apartment purchases in July dropped sharply when compared to the same month last year, as rising mortgage rates kept buyers’ pocketbooks closed, sending the market plummeting to the lowest levels in decades.

Just 6,912 units were sold in July, according to a monthly report released Monday by the Chief Economist at the Finance Ministry, a fall of some 27 percent from the figure in July 2022 of 9,432, which itself was a 28% drop from July 2021.

Transactions fell 3% from June to July, according to the report, which showed Israel’s once red-hot housing market nearly grinding to a halt.

July’s total barely topped the lowest-ever level for July, recorded at the height of the Second Palestinian Intifada in 2002, when security challenges sent the economy into a recession.

Both new homes and second-hand purchases were down, the Ministry reported.

“This low is particularly noticeable in second-hand apartments, although in the market segment of the new apartments sold on the free market” there was also a deterioration, the report said.

Excluding government-subsidized apartment sales, only 6,264 homes were sold in July, a 29% decrease compared to July last year, and a one percent drop from a month before.

“There is nothing new under the sun. Apartment buyers continue to sit on the fence,” Raul Sargo, president of the Boni Ha’aretz Contractors Association, said in a statement to the Walla outlet.

“The Israeli government must take care to increase the supply of apartments by providing incentives to contractors and entrepreneurs, against the background of the decrease in apartment sales,” he urged.

Unsurprisingly purchases of second homes were among the hardest hit, falling 41% year-over-year, with just 1,026 so-called investment apartments bought in July, down from 1,800. The figure represented a 9% slide from June this year.

View of a construction site for new housing in the southern Israeli city of Beersheba on July 28, 2022. (Nati Shohat/ Flash90)

First-time homebuyers came closest to reversing the trend, purchasing 3,971 units, just 11% fewer than in July 2022 and 4% more than in June this year. The year-over-year decline marked the most modest drop since April 2022, when homebuying began to fall off.

Apartment purchases fluctuate throughout the year, and from one year to the next. Israel had seen its real estate market steadily balloon over recent decades before the Bank of Israel began hiking interest rates last year to reign in inflation. Just 4,001 real estate transactions were recorded in April 2023, down from some 9,000 in April 2022.

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