First-time buyers are purchasing homes at the highest levels in a decade in Israel, while property investors are net sellers and homeowners seeking to trade up are struggling because they can’t sell their existing property.
That’s the picture that emerges from the first-quarter report on residential real estate by the Finance Ministry’s chief economist, released on Sunday.
First-time buyers, known as young couples in official parlance, have been storming the housing market thanks to the government’s Machir L’Mishtaken (Buyer’s Price) program, which enables first-time buyers to buy a home below market prices
All told, 26,462 homes were sold in the first three months of the year, a decline of 3.7% from the same period last year, but the highest quarterly total since then. The number of home sales at market prices, that is, not counting Machir L’Mishtaken, was down a much sharper 11% to about 24,000, the lowest level since 2012.
Homes bought through Machir L’Mishtaken grew nearly fourfold from a year ago to about 2,500 units. By comparison, the number of purchases at market prices by first-time buyers declined 3% to about 10,000, the treasury said. All told, first-time buyers bought about 12,000 homes in the quarter, a 13% increase from a year ago.
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Property investors, who face higher taxes as part of Finance Minister Moshe Kahlon’s drive to lower housing prices, sold around 5,800 homes in the quarter, the biggest number for several years.
After more than a decade of steady price rises that have only recently begun to edge down, buyers are focusing on the lowest-priced houses. That resulted in a 3.7% drop in the average price for a home bought since the second quarter of 2017 to the first quarter of 2018.
The only area in Israel where the number of real estate transactions rose in the first quarter was in the center, and that came mainly from the sale of new homes. In its report, the treasury speculated that declines in new-home sales in the area last year caused contractors to lower prices, spurring sales this year.