Home Sales in Israel Fall as Investors Drop Out of Market

Sales declined 12% in the first half, although market remains very brisk.

Ofer Vaknin

Finance Minister Moshe Kahlon’s efforts to lower the heat in Israel’s housing market seems to have made some progress in the first half of the year, according to figures released Monday from the Central Bureau of Statistics.

The bureau said the sale of homes dropped by 12% in January-June from the same time in 2015, to about 59,000 units. The first half of 2015 marked a record for home sales, so even after the year-on-year decline, the rate of sales remains high.

However, an important element of the latest home sales figures is that investors appear to be dropping out of the market. They are evidently getting the message from Kahlon – through the higher taxes he imposed a year ago and new taxes he plans in the 2017-18 budget on owners of three or more homes – that they are unwelcome.

In the first half of the year, investors accounted for just 19.5% of all home sales, the lowest rate since the treasury began breaking them out as a separate category a decade ago. They also accounted for about 30% of all sales of second-hand homes.

Investors were big sellers mainly in the Sharon area, which includes towns like Netanya, Herzliya, Ra’anana and Kfar Saba, where they accounted for 40% of all second-hand home sales.

First-time buyers, known as “young couples” in housing industry parlance, appear to be firmly in the market. Although there are no figures yet available for the category, demand by them is evidenced in the Finance Ministry’s Mechin L’Mishtaken program, which tenders land to builders on condition they pass on the savings to home buyers.

CBSD figures showed that cities hosting the program, including Rosh Ha’ayin, Afula and Kiryat Gat, saw some of the biggest home-sale activity around the country in the first half.