25,500 homes were purchased in the first quarter of 2013, 11% fewer than in the preceding quarter, the Ministry of Finance reported today. The drop followed four consecutive quarters of rising sales. "A geographical breakdown shows a far greater drop in sales in the periphery, compared with the drop in the number of transactions in central Israel and Jerusalem, where the drop in sales was partly offset by stable transactions by buyers of bigger homes," states the ministry in its review.
Tiberias had the largest drop in home sales (down 24.8% from the fourth quarter of 2012 to the first quarter of 2013), followed by Nazareth (down 15.7%), Rehovot (down 13.9%), Beersheva (down 13.8%), Haifa (down 12.6%), and Netanya (down 12.3%).
Young couples bought 10,100 homes in the first quarter, 7% fewer than in the preceding quarter. "It can be assumed that the sharper drop in home purchases by young couples was partly due to the stricter mortgage financing terms set by the Bank of Israel in October 2012," states the Ministry of Finance.
Buyers of bigger homes bought 9,900 homes in the first quarter, 9% fewer than in the preceding quarter, and the first drop in purchases since 2011. The Ministry of Finance says, "This segment also faced tighter mortgage financing terms by the Bank of Israel in October 2012. The geographical breakdown shows a sharp drop in home purchases by people buying bigger homes, above the national average, in Rehovot and Beersheva. In contrast, sales were stable in central Israel and Jerusalem, and fell slightly in the Sharon."
The biggest drop in home purchases was by investors: there were 20% fewer purchases of homes for investment in the first quarter than in the preceding quarter, after a 46% increase in purchases since the low in the fourth quarter of 2011. In Tel Aviv, purchases of homes by investors fell 13% in the first quarter, compared with the fourth quarter, after a 9% drop in the fourth quarter compared with the third quarter. Investors bought 48% of new homes sold in the first quarter, up from 43% in the preceding quarter. Foreign residents bought 18% of new homes in the first quarter, up from 13% in the preceding quarter. However, the proportion of new homes bought by foreign residents was well below the 28% of purchases in the first quarter of 2012.
The Ministry of Finance says that the Bank of Israel's restrictions on mortgages, including a loan-to-value ratio of 50% by investors, is the main reason for the drop in the purchase of homes for investment. The ministry said that the average household income of an investor in homes was NIS 22,500 in the first quarter, 13% above the average household income of investors in the preceding quarter.
Published by Globes [online], Israel business news - www.globes-online.com - on July 29, 2013
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