After months of rising house prices, demand for new homes is falling, according to a housing report from the Central Bureau of Statistics (CBS) Sunday.
The number of new units sold from April to June stood at 10,970, down 14.4% on the previous quarter, January to March 2022, according to the report.
New buyers may be finding it increasingly difficult to find the down payment needed on high house prices (up 15.4% this year). Hiked purchase taxes on those buying properties as investments may also be beginning to bite.
According to the CBS report, there has been growing interest in properties outside Israel’s central regions.
The fastest-growing housing markets — when looking at April to June compared with January to March — were Or Yehuda, Lod, Rosh Ha’ayin, Dimona, and Kiryat Bialik. All grew by more than 50% quarter on quarter, suggesting that those who are in the market to buy are looking outside the big cities in a search for value for money.
About a quarter of all the new apartments sold between April and June 2022 were in the central region, concentrated in Netanya (624), Tel Aviv-Jaffa (561), Ashkelon (489), Ramat Gan (473) and Jerusalem (464). The biggest falls in transactions quarter on quarter were found in Ashkelon, Rishon Lezion and Beit Shemesh.
Nevertheless, the largest numbers of apartments sold since January were in Tel Aviv-Yafo with 1,206 units, Ashkelon (1,221) and Netanya (1,117).
Meanwhile, the role of the government in the housing market, through its various affordable housing schemes, seems to be increasing steadily. Between April and June 2022, 25.5% of apartments were sold with government subsidies.
In other indications that market demand is falling and people may be focusing on cheaper properties, the amount borrowed in mortgages in July came to a total of NIS 10.1 billion ($3.1 billion), down from NIS 11.9 billion ($3.7 billion), according to the Bank of Israel.
It is too soon to determine that the fall in borrowing is due to rising interest rates, but it does seem reasonable to link it to the fall in property transactions.
In addition, the government’s focus on building more apartments and doing so faster is starting to work its way through the labyrinthine development process. Construction starts from April to June 2022 stand at around 5,000 apartments, a 5% increase on the previous three months, according to the report.
Though an improvement, these volumes fall short of the 70,000 new builds a year politicians have targeted, and experts say are needed, to bring house prices and buyer demand down.