Buyers waiting for the much-touted plan for exemptions from the value-added tax on the purchase of a new home caused home sales to plunge to its lowest level in three years, the Finance Ministry said yesterday.
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Only about 22,300 homes were sold in the second quarter, a drop of 13% from the first quarter and a 29% decline from the same time a year ago, the treasury said.
It was the lowest level since the final quarter of 2011, when weeks of nationwide social-justice protests also caused home buyers to wait to see how the market developed.
The home sales data were the latest evidence that the so-called zero-VAT plan was wreaking havoc on the real estate sector. With buyers holding off, builders have delayed starting new construction, threatening to create an even tighter housing shortage in the near future.
The zero-VAT legislation, which Finance Minister Yair Lapid is promoting as the centerpiece of a plan to rein in soaring home prices, has stalled in the Knesset. Lawmakers failed to approve it before going into summer recess, so that it probably won’t go to a vote until October.
Not surprisingly, the segment of the home-sale market taking the biggest hit was new homes bought by first-time buyers, the category that is supposed to benefit from the exemption. Only 8,000 units were sold in the quarter, a drop of 14% from the first quarter and 40% from a year earlier, the treasury said.
By comparison, purchases of second-hand homes by first-time buyers, where the VAT exemption won’t apply, were down only 6% from the first quarter.