The Central Bureau of Statistics yesterday reported figures showing a 2.9% drop in the average price of housing in Israel. Prices fell for all sizes of housing units, varying from a 1.3% decrease in the average price of 2.5-3-room apartments to a 5.8% fall in the average price of 1.5-2-room apartments.
This is the first time that the Central Bureau of Statistics has reported a drop in prices of this magnitude, and the first time in three years that the average price of all types of housing units fell. The last time a similar decrease in prices was reported was in the fourth quarter of 2013, when nationwide prices fell by 0.4%. Going still further back, the last time a general decline in prices for all sizes of housing units took place was 10 years ago, in the fourth quarter of 2007, when prices were down 4.9%.
While these figures should not be taken lightly, it should be kept in mind that they are averages affected by various biases. At the same time, as all statisticians always say, it remains to be seen whether a change in trend or a temporary blip is involved. In 2013, for example, the decline was a one-time phenomenon, and prices resumed their upward path in the subsequent quarters. This time, it is possible that this will not be the case, but the figures should be regarded with the necessary caution. Keep in mind that the Central Bureau of Statistics figures include buyer fixed price apartments, and that following criticism, the Central Bureau of Statistics revised its calculation method in order to adapt the weight of the discount apartments to the weight of the ordinary housing units. Nevertheless, it is difficult to isolate the groups, and to determine to what extent the discounted apartments really had an effect. At the same time, the Central Bureau of Statistics explains, "The figures for the most recent quarter are temporary," meaning that they are not final, and are subject to revision. This is another reason to wait patiently for figures for the next quarter - in order to see how much prices fell, if at all.
While the nationwide average home price fell in the first quarter of the year, an analysis by districts shows a mixed trend, with both rises and falls. According to the figures, the most significant fall was in the Sharon district (Hod Hasharon, Herzliya, Hadera, Kfar Saba, Netanya, Ramat Hasharon, and Ra'anana), where the average home price fell from NIS 1.866 million in the fourth quarter of 2016 to NIS 1.736 million in the first quarter of 2017, a 6.9% drop. Other decreases were in the Jerusalem district (0.6%), the southern district (2.6%), and the Haifa suburbs district (0.9%). At the same time, while the nationwide average housing price was down, the average price rose in other districts: 2.8% in the central district and 2.3% in both Haifa and the area surrounding Jerusalem. Prices in Tel Aviv were unchanged.
"Globes" reported several months ago that housing prices in Ra'anana were showing signs of a downtrend. At the same time, some developers told "Globes" that housing prices had reached a dead end. As of now, however, it is hard to find a developer or contractor willing to say that housing prices for his project are going down. The minority of projects resulting from accelerated marketing in the buyer fixed price tenders, the rise in prices for private land and the minority of deals for it are also likely to affect the price, as well as the abundance of National Outline Plan 38 projects, in which housing prices are sometimes lower. In the bottom line, the results of the next quarter must be awaited before it can be seen whether a trend is involved.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 16, 2017
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