Home Prices Climb Even as Fewer People Are Buying

Figures for latest quarter show an average 1.6% increase despite gov’t efforts to reduce housing prices.

Ofer Vakhnin

Home prices are still climbing, despite the government’s stated intentions to lower them, according to figures released by the government appraiser on Monday.

The figures, from the second quarter of the year, indicate that prices in 16 major Israeli cities increased by an average of 1.6% for the quarter versus the first quarter of 2014, and are up 6% from the second quarter of 2013.

The period under examination – April to June of this year – is exactly when Finance Minister Yair Lapid started discussing his plan to exempt some first-time homebuyers from VAT on certain new homes purchased from contractors. Cabinet members also started advancing the so-called “target price” plan to offer homes for reduced prices in various areas.

Following the announcement of these plans, the housing market slowed considerably, with far fewer transactions, particularly on new apartments, stated appraiser Tal Aldroiti in his quarterly report. Many would-be buyers decided to wait, hoping that they’d be able to take advantage of the government’s plans, he noted.

Yet despite the fact that fewer people bought last quarter, this apparently did not reduce prices, he added.

Aldroiti’s review covers 3,900 different 4-room apartments in 16 cities that changed hands over the quarter. This is 25% fewer apartments than his survey from the first quarter of the year.

The sharpest price increases in the last quarter were in Ramle, where 4-room apartments sold for 1.19 million shekels, up 7% from the first quarter and 12% from the parallel quarter of 2013. In Eilat, home prices averaged 994,000 shekels, up 6% from the first quarter and 9% from the parallel one.

Four-room apartments in Tel Aviv cost an average of 2.77 million shekels, up 1% for the quarter and 9% versus the parallel quarter of 2013.

In Be’er Sheva, however, prices dropped a notable 4% from the first quarter, to 850,000 shekels, and were up 4% from the parallel quarter in 2013.

Prices were down 1% for the quarter in Holon, to 1.56 million shekels on average, and were unchanged in Kfar Sava, Herzliya and Ashkelon.

Previous studies published by the Central Bureau of Statistics have come to similar conclusions – home prices are still rising, but fewer people are buying. A Finance Ministry report published last week also found far fewer transactions last quarter, making it the weakest quarter for home sales since the social justice protests began in 2011.

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