Housing Prices in Israel Continue to Rise; Tel Aviv Sees Slight Drop

Nationwide, apartments cost 6.7% more in late 2012 than they did in late 2011; average 4.5-5 room apartment in Tel Aviv cost $850,000, down 15% from 2011.

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Home prices in Israel are rising, according to new data released by the Central Bureau of Statistics, although Tel Aviv reportedly saw a dip during the fourth quarter of 2012.

The figures, released by the CBS on Friday, reinforce concerns expressed by the Bank of Israel and within the real estate industry regarding the price of homes in Israel.

Nationwide, home prices rose by 1% in December compared to the previous month, according to CBS figures. They were 6.7% higher than in December 2011.

Price increases greatly picked up their pace at the end of 2012 compared to much of the rest of the year, according to CBS data. That said, they did not rise nearly as quickly as they did during the stand-out year of 2009, during which the housing price index rose by a record of more than 2% per month for several months.

The price increases were not uniform across the country, however. Tel Aviv saw a drop in the price of larger units during the fourth quarter of 2012 compared to the previous quarter. Home sales in Tel Aviv have shifted recently to less expensive neighborhoods in the south and east of the city, thereby driving down the average price for the city as a whole.

The biggest price decreases were for four-and-a-half to five-room units in Tel Aviv; they dropped 12.7% from the previous quarter and 15% compared to the final quarter of 2011. The average price of four-and-a-half to five-room homes in Tel Aviv was NIS 3.13 million.

Overall, Tel Aviv homes sold for 5.4% less during the fourth quarter of 2012 compared to the previous three months. But they were 3.7% higher than during the final quarter of 2011.

The average home price in Israel during the fourth quarter of 2012 was NIS 1.15 million. The highest price increases were for one-and-a-half to two-room apartments in outlying areas in the north. The outlying areas of the Galilee saw price increases of 10%, up to an average of NIS 354,000 for smaller apartments. In the Krayot suburbs north of Haifa, prices increased by 9.7% to NIS 372,000 for small apartments, while in Haifa itself prices jumped by 8.3% to an average of NIS 472,000 for one-and-a half to two-room apartments. In Jerusalem, the price of small units increased by 7.3% compared to the prior quarter, up to an average of NIS 1.11 million.

A separate CBS survey which excluded homes that are rented out and which used a different model of calculation found that fourth-quarter home prices across the country actually dropped 1% compared to homes bought during the previous quarter. But they were reportedly 4.5% higher than the average price during the last quarter of 2011.

As opposed to the CBS’ standard housing price index, these figures are adjusted in an attempt to reflect a weighted average that takes into account geography and home size.

Illustration of housing pricesCredit: Dreamstime
Housing cost increases vary greatly around the country.Credit: David Bachar

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