Israelis purchased 11,600 homes in January 2022, a similar number to December 2021 figures and up just 2% from the same period last year, according to a new housing report published this week by the Finance Ministry’s Chief Economist Office. However, the sales price per occupant is still rising, up 11% year on year.
The average price paid by households for a newly built home stood at NIS 1.7m ($530,498), although some parts of the country such as the coastal city of Netanya saw significantly higher price tags.
Sales of existing properties averaged NIS 2 million ($624,645), with year-on-year increases of 11% in Jerusalem, 10.6% in Netanya, 8.5% in Haifa, and 7.1% in the center of the country. Resale prices fell back in Tiberias, down 10.3%, according to the report.
In Tel Aviv, the share of apartments classed as luxury homes — those selling for at least NIS 10 million ($3.1 million) – rose steeply, from 2.4% of properties sold a year ago to 8.5% this January.
Contractors sold 4,400 new homes, up 27% from a year ago, and there are some indications that the number of apartments being sold off-plan is increasing. Their cash flow is up around 16%, according to the report. Around half of the homes they sold formed part of subsidized housing plans, like the “Buyer’s Price” (Mehir Lamishtaken) lottery system (now being phased out) and the new “Target Price” (Mehir Matara), aimed at helping households get on to the housing ladder.
In addition, sales to investors — households that already own one or more dwellings — fell by 32% in January, largely as a result of the purchase tax hike from 5% to 8% on second or more homes. The tax hike was reintroduced in late November 2021 in a bid to dissuade households that already owned a home from buying more and contributing to rapidly rising housing prices.
In November, close to 40% of all housing units bought that month were by investors, an increase of 200% compared to the same period last year, and 41% more than October 2021, which also saw record investor activity.
A report last month by the Finance Ministry’s Chief Economist Office said that over 151,000 housing units were bought in all of 2021, up 40% from 2020 and the highest since 2015 (by about 27%) when the purchase tax first increased under the leadership of then-finance minister Moshe Kahlon.
At the time, the portion of homes being bought annually as investment dwellings reached 30% of the housing market.
In January, investors sold off 2,500 properties, up 13% from the previous year.