Home-buying in Israel Hits 13-year Peak

Attempts to cool the market don't seem to have worked too well.

Arik Mirovsky
Arik Mirovsky
 Inrom Construction Industries looks likely to cash in from increased construction of new housing units.
Inrom Construction Industries looks likely to cash in from increased construction of new housing units.Credit: Tomer Appelbaum
Arik Mirovsky
Arik Mirovsky

More homes were purchased in the last three months of 2013 than in any quarter in well over a decade, thanks largely to first-time buyers and investors, according to data published in the Finance Ministry's annual report.

Some 32,200 homes changed hands between October and December last year, a 13-year high.

In the Jerusalem area, a significant number of transactions involved members of Hever — the consumer club for career soldiers and Israel Defense Forces retirees — and public sector workers. These people were buying apartments as investments. Hever is frequently able to offer new apartments to its members at significant discounts.

First-time buyers were more likely to be buying second-hand homes, at prices of up to 1.5 million shekels.

The fourth quarter capped a record year for Israel’s housing market, proving that attempts by the government and the Bank of Israel to cool down the market sorely failed. The government essentially did nothing, aside from projecting a lack of reliability, and while the Bank of Israel took several steps designed to make mortgages more difficult to obtain, it also continued cutting interest rates, pushing more buyers into the market.

The greater Tel Aviv region, the center of the country as a whole and Be’er Sheva stood out with notable increases in transactions. In the center of the country, a record 5,300 apartments changed hands, 17% more than the previous quarterly record set in the fourth quarter of 2007.

A major project in Rosh Ha’ayin contributed to 70% of the increase in sales, according to the Finance Ministry report. While the report does not name the project, sources told TheMarker it is referring to 400 homes put up for sale by Tidhar and CPM, with a starting price of NIS 888,000 a home. The apartments were sold to members of Hever.

The report notes that people who invested in apartments in the center of the country had a median income of 36,000 shekels a month, while first-time buyers had a median income of 14,000 shekels a month.

In the Jerusalem region, the report says, real-estate investors had significantly lower income than the countrywide average, and two-thirds of employed investors in the region were public servants. It suggests that their job security may enable them to take out larger loans.

A total of 7,800 homes were bought by investors (including foreign residents) in the final quarter of the year, the highest rates since the fourth quarter of 2010.

Investors also sold 4,700 apartments during the quarter, the highest rates seen in several years.

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