The Ministry of Finance's 0% VAT plan is still affecting sales of new apartments by contractors, although less than last month, according to June 2014 Central Bureau of Statistics demand and sales figures for contractors' new apartments.
The figure show that 1,685 new apartments were sold in June, compared with 1,318 in May 2014 and 2,013 in June 2013. This is a considerable 30% increase, compared with the preceding month, but 16% less than in the corresponding month last year. Despite the increase from the preceding month, the number of new apartments sold is still low, compared with monthly average in recent years.
The housing sector believes that people who think they are eligible for 0% VAT are waiting for the program to become effective before buying an apartment. Those seeking to purchase an apartment as an investment or in order to improve on their current housing, however, are going ahead with purchases, including apartments that may be eligible for a benefit at a later stage, which explains the rise in new housing sales in June. At the same time, it cannot be ruled out that the low sales figures in the preceding months have led to sales and bargain campaigns by contractors, thereby boosting sales of new housing in June, compared with the preceding month.
Central Bureau of Statistics figures for May 2014 showed a noticeable effect of the 0% VAT plan: apartment sales totaled 1,318, down 20%, compared with April 2014 sales, and 45%, compared with May 2013, when 2,416 apartments were sold.
Published by Globes [online], Israel business news - www.globes-online.com - on July 31, 2014
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