Housing purchases are down, but price levels still unclear

New Finance Ministry numbers show buying is down for third consecutive month, though no real sign yet of falling values

Illustrative. Israeli families on a warm winter day outside the city of Rehovot, January 23, 2021. (Doron Horowitz/Flash90)
Illustrative. Israeli families on a warm winter day outside the city of Rehovot, January 23, 2021. (Doron Horowitz/Flash90)

For the third consecutive month, housing purchase activity in Israel has fallen, according to a report released Tuesday by the Finance Ministry’s Chief Economist’s Office.

The detailed report does not give insight into one of the most pressing questions for potential buyers — will pricing be affected? — but does tie in with a Central Bureau of Statistics (CBS) survey on consumer confidence, also released this week, that suggests people were becoming less certain about making big household purchases over the next year.

CBS is set to release the monthly figures on housing prices in the coming days.

According to the latest Finance Ministry report, 10,500 housing units were sold in the free market in May, a fall of 16% compared to the previous year.

These include apartments sold as part of Israel’s discounted housing lotteries, Mehir Matara (Target Price) and its predecessor Mehir Lamishtaken (Buyers’ Price). Units bought under the latter program, which is winding down, accounted for 849 properties in May. The Mehir Matara program is in the midst of running its second lottery for a further 5,500 units, which ends on July 17. The first lottery drew over 100,000 people to compete to buy the apartments that will be built, with 10,053 lucky winners.

First-time buyers outside the lottery schemes numbered 4,200, a fall of just 5% compared to last year, according to the report, which said first-time buyer purchases appear to trend toward the peripheral areas of the country.

The Finance Ministry data also suggests the housing market is becoming less attractive to investors, defined as households that already own a primary property in Israel, who have to pay more in purchase taxes combined with rising inflation. Investors bought 1,900 apartments in May (a drop of 26% on the previous year), and sold 2,300 properties, reducing their share of the market to 18.5%, a 2.4% overall reduction compared to May 2021, according to the report.

Key areas where investor interest has fallen include Rehovot and Tel Aviv, the data showed.

New home sales by developers have been falling since February and are down 16% on last May.

A similar fall has been seen in the sale of “secondhand” apartments, which were down to 6,700 units, with the biggest reductions in the center and in Netanya (although both still remain substantial markets).

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