New Data Show Easing of Israel's Housing Market

Statistics bureau, treasury both sees slowdown in home sales in Israel over last year

Israeli Finance Minister Moshe Kahlon gestures as he speaks at an event in Ofakim, southern Israel May 29, 2017.
Israeli Finance Minister Moshe Kahlon gestures as he speaks at an event in Ofakim, southern Israel May 29, 2017. AMIR COHEN/REUTERS

Two reports by the government released on Sunday pointing to a continued easing in the housing market.

The Central Bureau of Statistics said the number of new homes sold in the 12 months through June 30 fell 14.9% from a year earlier to 27,115 units. It showed an even sharper drop in the first half of 2017 of 17% versus the second half of 2016.

Meanwhile, the Finance Ministry’s chief economist said that combined sales of new and second-hand homes declined 13% in the first six months of the year from the same time in 2016 to about 51,800 units. That was the lowest level since the first half of 2014 when the market briefly cooled in anticipation of then-Finance Minister Yair Lapid’s plan to exempt many buyers from the value-added tax.

Moshe Kahlon, the current finance minister, has taken a different tack to reining in home prices by discouraging property investors, mainly through a new tax on people who own three or more homes. Kahlon suffered a major setback last week when the High Court of Justice ruled that the Knesset had passed the legislation for the tax improperly and said it would have to be relegislated.

The treasury report found that even though investors were bailing out of the market by selling more properties and buying fewer of them, that wasn’t out of concern about the new tax. Rather, it said, it was in reaction to a June 2015 Kahlon initiative to raise the purchase tax on property.