Purchases of new and secondhand housing were down in October. 7,000 housing units were sold in this month, 14% fewer than the number of units sold in September and 24% fewer than the number sold in October 2013. The figures are from a survey published by the Ministry of Finance on real estate transactions in October and in the third quarter of 2014.
According to the survey, the drop in the number of transactions in October is particularly prominent in the secondhand apartment segment (17% fewer purchases compared with September, and 20% fewer compared with October last year. At the same time, the numbers were also down in the new housing segment (6% compared with September, and 12% compared with October 2013).
The figure also show a steep drop in deals involving new housing units in the Jerusalem and Tel Aviv regions, and a rise in such deals in the Hadera region, the coastal plain and the south. The decline in purchases of secondhand housing extended to all regions except for Tiberias.
The Ministry of Finance blamed the fall in deals by purchasers of a first apartment on the 0% VAT plan for them, which was first revealed to the public last March. The figures since the plan was announced show a steep fall in purchases. The plan has since been shelved, due to the upcoming elections.
"With the announcement of the 0% VAT plan for purchasers of a first apartment, steep declines were posted in purchases of apartments by young couples, except for September. The total number of housing units bought by young couples in April-October this year was 7,000 less than during the corresponding period last year," the Ministry of Finance's survey stated.
Concurrently with the lower numbers of purchases by those buying their first apartment, the number of housing units purchased by investors also fell in October. The total number of housing units purchased was 1,900, down 8%, compared with the preceding month, and down 13%, compared with October 2013. At the same time, the proportion of deals involving investors rose to 27%, its highest level since February 2011.
"It can be assumed that, among other things, the Bank of Israel's interest rate cut in September contributed to the higher proportion of purchases by investors," the Ministry of Finance explained. This increased in the proportion of deals involving investors extended to all regions, other than Haifa. In Tel Aviv, this proportion reached a record 56%, its highest level since at least 2002.
At the end of its survey, the Ministry of Finance notes that initial figures for November show a steep rise in the number of transactions, compared with October, following a sharp increase in the rate of purchase in the second half of the month.
Published by Globes [online], Israel business news - www.globes-online.com - on December 24, 2014
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