Fewer Investors Buying Apartments in Tel Aviv, Study Shows

Finance Ministry statistics show investors make up lowest proportion of transactions in the region since 2002.

There has been a steep decline in the purchase of apartments for investment purposes in the Tel Aviv-Jaffa area in the past quarter – according to the Finance Ministry's fourth-quarter summary of the residential real estate industry, published Tuesday. Investors accounted for only 32% of transactions in the region, the lowest level since 2002, when the treasury began keeping such records. In 2010 investors accounted for half of all the transactions in the region.

These figures come in addition to statistics published Tuesday by the Housing Ministry, indicating that the percentage of apartment buying for investment is declining, but it is not a clear trend as yet. In Haifa and the peripheral areas, for example, there was actually a significant increase in such purchases in the fourth quarter. "These areas are characterized by a low ratio between the price of the apartment and the investor's salary. Therefore, in these areas the Bank of Israel's financing restrictions are less effective than in the center of the country," according to the summary.

According to the report, the purchase of apartments by investors increased by 3% in the fourth quarter, after a 13% rise in the previous quarter. On the other hand, the treasury notes that "the sale of apartments by investors increased by 12 percent in the fourth quarter, twice the rate of increase in the total transactions in the quarter," after an increase of 23% in sales by investors in the third quarter.

"The sale of apartments by investors is particularly in evidence in the periphery, especially the increase in the sales by investors who are exploiting the larger exemption from the betterment tax as part of a temporary order that was due to expire at the end of 2012," said the report. "It is possible that the reason for the slowdown in the increase in investor sales in the fourth quarter is the cancellation of legislation extending the time limit for receiving an exemption from betterment tax to those selling an 'extra apartment.'"

The total number of transactions increased by 5% in the fourth quarter compared to the previous quarter, according to the treasury, after an increase of 10% in each of the preceding quarters. "Compared to the same quarter last year, which was still affected by the social protest, there has been an increase of 52%," according to the report. "The increase in transactions in the quarter was led by those improving their housing (an increase of 14%). After three consecutive quarters of increases at a cumulative rate of 41%, there was a moderate decline in the purchase of apartments by young couples."

Ofer Vaknin
Limor Edrey