Free Fall: Apartment Sales in Israel Slump 65% in October

The recession in Israel’s housing market is intensifying, a survey of home sales published by the Finance Ministry’s chief economist indicates.

Only 5,100 apartments were purchased in October – an unusual decline of 65 percent compared to October 2021, and a fall of 36 percent compared to last month, the survey found. These figures are the lowest recorded since April 2020, which saw the beginning of the COVID outbreak. They are also among the lowest levels recorded in October in the past 20 years.

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The decline is partially explained by the fact that purchasers rushed to close deals in October 2021 before the purchase tax was raised. However, it is still an unusual level compared to previous years. Purchases for investment purposes in October totaled only 929 apartments, a sharp drop of 80 percent compared to last October, and of 32 percent compared to the September.

Sales by contractors in October totaled 1,900 apartments – a decline of 66 percent compared to October 2021 and of 35 percent compared to the previous month.

The only area where sales increased compared to September is the center of the country, but there, too, sales declined relative to October 2021. Housing investors and housing flippers have a much higher income potential in this area, but the figures hint at higher levels of leverage.

First-time home buyers in October accounted for 2,500 units, including apartments purchased through the Mechir Lamishtaken program, a state initiative to facilitate the purchase of a first apartment with preferential terms. This figure represents a 50 percent decline compared to last October, and a 37 percent fall from September. The slump was evident all over the country. For example, home sales dropped 37 percent in the Be’er Sheva area and sank 63 percent in the Tel Aviv area. Haifa and Kiryat Gat saw the largest number of sales to first-time home buyers.