The price of housing rose 2.1% and rents were up 5.6% in the first quarter of 2014, compared with the corresponding quarter last year, according to figures for January-March 2014 published today by the Ministry of Housing and Construction.

The ministry states that the demand for housing declined, particularly for secondhand housing. "In the first five months of 2014, demand for housing purchases was down sharply, compared with the corresponding period last year," a survey prepared by Ministry of Housing and Construction Information and Economics Analyst Division senior director Yossi Shevet said. "Following last year's record volume and the anticipated government programs, demand is leveling off, especially for secondhand housing, where we were surprised by a 21% drop. Demand for new housing also fell, by 11%."

The ministry attributed the steeper drop in demand for secondhand housing than for new housing to recognition of the situation by the contractors, who responded accordingly, in contrast to sellers of secondhand housing, who continued to demand high prices: "It appears that the contractors are responding to lower demand, and are setting their prices accordingly, in contrast to potential sellers of secondhand housing."

The ministry also addressed the fact that while the volume of deals is falling, the volume of housing loans remains high, saying, "In our opinion, this fact reflected an increase in loans taken by parents to help finance an apartment for their children."

The figures also show a 2% dip in building starts, and continuation of the downtrend in building permits. 7,245 building permits were issued in the first quarter of 2014, giving an annual pace of 30,000 permits, considerably lower than the 34,000 building permits issued in 2013.

139 monthly salaries (11.5 years) were needed to purchase an average apartment in Israel in the first quarter of 2014, down slightly from the 141 monthly salaries needed in the fourth quarter of 2013, and the same as in the third quarter of 2013.

Published by Globes [online], Israel business news - www.globes-online.com - on July 21, 2014

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