Israel’s housing market is showing continued signs of cooling off, amid shrinking sales and a move to lower-priced properties, the Finance Ministry chief economist said in a report on the real estate sector released on Monday.
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In the first seven months of the year, residential sales fell 13% from the same period in 2016, to about 60,300. The figure was down 21% from its peak in January to July 2015.
In addition to declining sales, the average home price dropped, to 1.64 million shekels ($465,000) in July from 1.75 million shekels in March. The chief economist said this did not reflect declining prices, but rather that buyers sought cheaper properties.
The drop also reflected a surge in home buying by members of Hever, a buyers club for career army officers that has tremendous purchasing power and that negotiated discounts with the builder Gindi Holdings, the treasury said.
Another factor was Finance Minister Moshe Kahlon’s Mahir Lemishtaken program for lower-cost housing that has also depressed prices, it said.
About the only area showing strength was home-buying by property investors, which in July reached its highest point since September 2016. Investors bought about 1,700 homes during the month, up from 1,600 in June, accounting for 19% of all home purchases.
Kahlon has sought to deter investors in order to free up more housing for people buying homes as a primary residence. However, his plan to impose a tax on owners of three or more residential properties was dealt a setback last month by the High Court of Justice, which ordered lawmakers to vote again on the law making it possible.