The public bought fewer new apartments in the first month of 2017, according to figures released by the Finance Ministry’s chief accountant yesterday.
The year 2017 has begun as a continuation of 2016, noted the report. Some 9,700 homes were bought in January, while the monthly average for 2016 was between 9,000-10,000, aside from October, when only 4,700 homes changed hands.
The percentage of homes bought by investors was 16%, similar to levels throughout 2016. However, the stock of apartments for rent fell 1,400 in January, as investors began to sell off their holdings.
January’s figure of 9,700 homes sold is 5% lower than the number in December 2016, and 3% more than the figure for January 2016.
The only distinct figure for January was a dropoff in the number of new homes sold. This was offset somewhat by sales of second-hand homes and sales by investors.
Some 2,200 new homes were sold in January, a 18% decrease from December 2016, and a figure on par with those seen in 2013.
Over the years, the portion of new homes out of all homes sold in Israel has averaged 25%. Over the past two years, the figure increased to 30% if not more; January’s figure is in keeping with the previous long-term average.
The Chief Economist’s office stated that the drop in sales of new homes was most notable in areas where homes were being offered at reduced rates under the government-sponsored Mehir Lemishtaken program, which is available to first-time buyers, but that it included all areas of the country, and all types of buyers, including investors and those buying their second home.
The chief economist also examined the incomes of people buying homes under the Mehir Lemishtaken program, and found that those buying homes through the program in Rishon Letzion had lower than average inco mes for the area, leading him to the conclusion that buyers were being assisted financially by their parents.
The percentage of investors in the market as of January was 16% of all buyers, a low level similar to that of the last few months. The report noted that investors were leaving the market for new apartments as of the last quarter of 2016. Investor purchases of new homes were down 30% from January 2016 and 18% from December. The report suggested that this is due to the new tax on owners of three or more apartments.
The report found that investors sold 3,000 apartments in January and bought 1,600 apartments, meaning there are 1,400 fewer apartments available for rental. The report called this a continuation of the trend beginning in the second quarter of 2016, of fewer apartments held by investors.
Israel at top of home-price increases
Meanwhile, the Economist reported that Israeli home prices increased at the fastest pace in the world between 2006 and 2016, second only to Hong Kong. Israeli home prices increased 82.1% over that period in inflation-adjusted terms, meaning their prices on paper increased even more than that: Prices in Israel increased 118% in nominal terms.
Homes in Hong Kong led the global price rise, with a 126.8% jump in real terms, and 211% in nominal terms.
In comparison, in countries such as Australia, Canada and New Zealand, where many analysts believe housing price bubbles are developing, prices increased by much more moderate percentages: In Australia they increased 37.1% in inflation-adjusted terms, in Canada they increased 48.8% and in New Zealand they went up 45.1%. In the United States, prices decreased 16.2%, in the wake of the the 2008 subprime crisis.
Housing data for Israel is available through 1994, and over that term home prices increased 235.7% in nominal terms, which places Israel sixth on the Economist’s list.
Even for the past year, from the third quarter of 2015 through the third quarter of 2016, Israel is ranked third on the list for real home price increases, after New Zealand and Canada.
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