Last Year’s Home Sales Highest for 13 Years

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Israelis brought approximately 111,000 homes last year, the biggest number since the year 2000, as rising prices, low mortgage rates and government incentives created a surge of demand.

The figure was up 8.8% from 2012, when some 102,000 new and second-hand homes were bought, the Finance Ministry reported Wednesday, citing preliminary figures.

But in contrast to previous years, the demand for homes in 2013 was firmly grounded in people looking for a place to live rather than speculating on property prices. The percentage of homes bought by investors − defined as people buying a second residential property − was relatively low compared to 2012. In December the number of home sales probably rose from November, the ministry said, citing preliminary data.

Part of the increase in home sales could be explained by government programs to aid young couples purchasing apartments in Jerusalem and Israel’s geographic periphery. The Jerusalem suburb of Beit Shemesh and the new town of Harish, in particular, saw a large number of purchases by young couples due to government programs.

Major real estate projects in Rehovot, Be’er Sheva and southwest Haifa in particular marketed relatively low-priced apartments that attracted young home buyers last year.

The government has been struggling to try and cool an overheated housing market. Prices rose to the equivalent of 136 monthly salaries in the third quarter, from 129 in 2010, pushing them to levels beyond the reach of many ordinary Israelis.

The Bank of Israel has tried to restrain demand by toughening mortgage conditions but has also lowered interest rates, making home loans more attractive.

However, the annual trends showed some signs of dissipating in the final months of the year. The Finance Ministry said the number of homes purchased in November dropped 0.2% from October, and 6% from a year earlier, to 9,200 units. It attributed the decline to a 35% drop in purchases by young couples in Jerusalem after the government incentive program expired.

But the drop in sales in November was moderated by a 10% increase in the number of apartments bought by investors over the previous month. Purchases by investors comprised 25.6% of all home sales in the month, the highest share in two years.

The Heftzibah neighborhood of Beit Shemesh is answering a rising demand for homes by young ultra-Orthodox couples..Credit: Tomer Appelbaum

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