The Ministry of Finance chief economist today provided additional evidence that the domestic real estate market is cooling off. The weekly survey by the chief economist department shows that 8,800 homes were sold in February, 9% fewer than in January and 7% fewer than in February 2016. Sales in January were 4% higher than in January 2016.
The number of deals in February was the fewest since August 2015, except for holiday months with fewer working days. An analysis of the findings shows that the low level of deals is attributable to a steep downtrend in sales of new housing units, combined with a 7% drop in purchases of secondhand housing units, following a relatively high level of deals in this segment in the two preceding months.
Sales of new housing units in February totaled a mere 1,900, down 16%, compared with the preceding month, on top of a similar drop in January. In comparison with the corresponding period last year, the decline in sales by contractors accelerated, reaching a 33% drop. Excluding buyer fixed price sales, sales by contractors in February totaled less than 1,800 housing units. Other than October 2016, when the number of deals was especially low (due to the Jewish High Holy Days, among other things), this is the smallest number of deals for new homes since August 2014, when buyers were waiting for the 0% VAT plan.
The decline in new housing purchases extended to all regions, but was most prominent in Rehovot and the central region. In the Rehovot region, which includes the cities of south-central Israel, only 212 new homes were purchased in February, 50% fewer than in February 2016 - one of the lowest levels in this area for decades.
An analysis of the findings show a steep drop in purchases by young couples in this region, very likely due to waiting for the planned sales in the framework of the buyer fixed price plan in a number of communities in the region, particularly in Rishon Lezion. 260 housing units were purchased in the central region, down 44%, compared with February 2016. An analysis of the figures shows that beyond the steep drop in purchases by young couples, new housing purchases by investors hit a low point of only 37 housing units. Especially prominent was the decline in these purchases in Rosh HaAyin and Ramat Gan.
The proportion of investors in total deals in February dropped to 16%, its lowest level since July 2015, after the purchase tax for investors was raised.
Published by Globes [online], Israel Business News - www.globes-online.com - on April 23, 2017
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