The downtrend in residential real estate deals is continuing. Central Bureau of Statistics figures published yesterday showed a fall in the number of new housing units sold by contractors, and Ministry of Finance chief economist Yoel Naveh has published new figures today showing a further drop in deals in the sector.
"The stagnation in the housing market continued in July," Naveh states at the beginning of his review of the residential real estate sector for July 2017. "The number of deals was 8,800 housing units, among the fewest deals in July in the past decade. This is 6% fewer than in June and 9% fewer than in July 2016. Excluding sales in the buyer fixed price plan, the decreases are 4% and 13%, respectively."
According to the review, the number of new housing units sold in July was the same as in the preceding month and 8% fewer than in July 2016. Excluding sales of new housing units in the buyer fixed price, the number of new housing units sold in July was actually 8% greater than in June, but 21% less than in July 2016. According to the Ministry of Finance, the reason is special bargain sales of a consumers club in the Rehovot area during this period. The bargain campaign was by the Hever club in cooperation with Gindi Holdings. The Ministry of Finance adds, "Since October 2016, there has been a steep drop in sales of new housing units ranging from 20% to 50% (each month in comparison with the corresponding month in the preceding year)."
Another important figure arising from the Ministry of Finance's review involves people seeking to improve their housing, a very substantial proportion of the real estate sector. The number of housing units purchased by this market segments is falling sharply: only 3,000 housing units were purchased in July by move-up buyers, down 11%, compared with the preceding month, and 22%, compared with July 2016. The review states, "This segment led the drop in the number of deals in July. This may reflect anxiety by people seeking better housing about buying a housing unit before selling their previous one."
People improving their housing must sell their previous home within a limited period in order to avoid incurring a tax liability. When the entire market is in a slowdown, people seeking better housing are afraid to buy new housing, fearing that they may not be able to sell their previous home within the stipulated time at the price they expected to get for it, or obtain a mortgage of the size they need. The Ministry of Finance's figures shows that the downtrend in the housing market is not confined to people buying their first home and investors; it is affecting the entire market.
Published by Globes [online], Israel Business News - www.globes-online.com - on September 11, 2017
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