Figures released this week that showed home sales slowing to a four-year low prompted the treasury to boast about slumping demand and hint it would depress prices.
“Outside its 27 degrees [Centigrade] but for us it’s frozen! September 2017 completed another frozen quarter for the property market,” the Finance Ministry said on its Facebook site Sunday, after its chief economist reported that home sales fell 26% year on year in September to 7,300, excluding those sold through the Mahir LemMishtaken program.
The treasury said in the first nine months of the year home sales were down 13% from the same time in 2016. The figure would have been even lower if not for the boost in supply as a result of property investors exiting the market in greater numbers.
On Monday, the Central Bureau of Statistics confirmed the slowdown, reporting that sales of new homes fell 16% in the 12 months through September from the previous 12 months, to 26,014. It was the slowest pace since 2013, the bureau said.
Among the sharpest declines were in Jerusalem, where sales slumped 25% to 1,240 units. Tel Aviv and central Israel saw sales fall 20%, to 1,280, but in the third-largest market, Kiryat Motzkin, sales nearly tripled, to 1,176.
Finance Minister Moshe Kahlon has made cooling off Israel’s overheated housing market a top priority, introducing new taxes to discourage property investors and launching Mahir LemMishtaken to sell homes at a discount. The program accounted for 29% of all new homes sold in September.
The developers’ trade group Bonei Haaretz takes issue with the idea that slowing sales will force builders to cut prices. Its president, Roni Brick, said last week that contractors would respond to slackening demand by reducing housing starts and balancing the supply.
In fact, a treasury study of Israel’s 10 largest home builders found that eight suffered sharply lower revenues in the January-September period, compared with the same period in 2016. It also found the more a builder opted to focus on higher-priced homes, the more likely it was to suffer lower revenues.
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