Appraisers: Home prices still rising

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"Buyer fixed price deals distorted the housing prices published by the Central Bureau of Statistics."

The Real Estate Appraisers Association in Israel today published its quarterly survey of housing prices for the second time. The survey covers prices of new and secondhand four-room apartments in a number of selected cities in Israel. The Ministry of Justice chief government appraiser formerly published the quarterly survey, but several months ago, the cabinet decided that the Central Bureau of Statistics would be exclusively responsible for publishing housing prices data in Israel.

As a result, the government chief appraiser stopped publishing a survey. The order given to the government appraiser to stop publishing data aroused great opposition, including among land appraisers, and the Appraisers Association decided to publish the survey itself, using the same methodology, and even the same graphic structure.

According to the Appraisers Association survey, housing prices continued rising in the fourth quarter of 2016, in contrast to the Central Bureau of Statistics' recent report showing a 1.2% decline in the housing prices index. While the two surveys both address changes in housing prices, they use different methodologies and databases.

The Central Bureau of Statistics database used in its survey is broader, encompassing dozens of communities, compared with the Appraisers Association survey, which is confined to only 16 cities. Another difference stressed by the Appraisers Association in the survey published today is that the Central Bureau of Statistics index does not exclude buyer fixed price deals, which the Appraisers Association says may have resulted in the figure showing a decline in prices.

"The Central Bureau of Statistics is misleading the public"

In the framework of its survey, the Appraisers Association cites a location in which the sale of apartments under the government program for cheap apartments strongly affects the general price in the statistics. "The importance of this index can be understood from the case of Rishon Lezion, where buyer fixed price deals reported in December 2016 accounted for 25% of all deals conducted in the quarter," the survey stated.

"When buyer fixed price deals were excluded, a 1% rise in comparison with the preceding quarter was demonstrated in the primary market. When they are not excluded, a 6% ostensible decline was shown in Rishon Lezion. While prices in the primary market are still rising, a faulty index including prices in the buyer fixed price plan will ostensibly show a dramatic fall in prices. This is probably the explanation for the index published by the Central Bureau of Statistics showing an alleged fall in prices in December 2016, which apparently included some of the buyer fixed price deals."

Commenting on today's publication of the survey, Appraisers Association chairman Ohad Danos said, "When the Central Bureau of Statistics publishes an index showing a fall in housing prices in December, it is simply misleading most of the public. The Central Bureau of Statistics is starting to lose its credibility, which makes the Appraisers Association's housing prices report even more important."

A 1.7% quarterly rise

The Appraisers Association report shows that prices continued to rise in the fourth quarter of 2016. These prices are solely for new and secondhand four-room apartments in 16 cities. According to the figures, fourth quarter prices in the surveyed cities were 1.7% higher than in the third quarter.

The quarterly increase reached 4% in Holon and Ashkelon, 3% in Netanya and Kfar Saba, and 2% in Ashdod, Modi'in, Ramle, and Tel Aviv. The increase in prices was only 1% in Beer Sheva, Jerusalem, Petah Tikva, Rishon Lezion, and Rehovot. Average housing prices in Haifa, Herzliya, and Eilat in the fourth quarter of 2016 were the same as in the preceding quarter.

The Appraisers Association survey also addressed the yearly changes in housing prices, in other words, a comparison of prices in the fourth quarter of 2016 with the fourth quarter of 2015. This comparison showed an 8.3% increase in housing prices, with the highest rise being 13% in Tel Aviv and the lowest 2% in Haifa.

Another interesting and important point about the Appraisers Association survey is the standard deviation of the data. While the price stated in the survey refers to the average price of a four-room apartment in a specific city, the variance within the cities is very large, meaning that the figure reflects only the broad average. The standard deviation for each community in the survey shows the extent to which prices differed within that city.

For example, the standard deviation was a huge 30% in Tel Aviv and over 20% in Netanya and Jerusalem. These deviations make possible a situation in which the price is falling in certain neighborhoods, while rising in others, and the general average shows in increase in price.

Published by Globes [online], Israel Business News - www.globes-online.com - on February 20, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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