Housing purchases for investment reach new low

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Sales of apartments by investors are falling all over Israel except in Kiryat Gat.

"The number of housing units purchased by investors in April 2018 was a mere 900, one of the smallest numbers in this market segment since at least the beginning of the previous decade," the Ministry of Finance chief economist reported today in a survey focusing on residential real estate in April 2018.

The figures also show that the number of housing units purchased by investors was 22% fewer than in April 2017, after investors' purchases in January, February, and March were over 20% fewer than in the corresponding months in 2017, respectively. At the same time, the proportion of total deals accounted for by investors was also lower than in previous years, reaching only 14% in April.

The Ministry of Finance survey also confirms the grave concern reported last week by "Globes" about a surplus of rental apartments in the Karmei Gat neighborhood in Kiryat Gat. "Globes" reported that despite having more attractive terms than previous tenders, the new state rental housing tender had failed to produce a single bid, among other things because contractors were afraid that there would be no demand for rental apartments. "Globes" also reported a growing supply of apartments purchased three years ago for investment in the new neighborhood. The Ministry of Finance survey states that while the national trend towards sales of apartments by investors is waning, the opposite is true in Kiryat Gat: "Given the drop in sales by investors in the Beersheva area, Kiryat Gat stands out by bucking the trend, especially the Karmei Gat neighborhood, where purchases by investors boomed in 2015. An analysis of deals for secondhand apartments in this young neighborhood over the past three years shows that those who hurried to sell their property in 2016 got the biggest return, which is now falling to only 2%."

Sales by investors totaled 1,300 housing units in April, 24% fewer than in the corresponding month last year. The decline was especially prominent in Beer Sheva and Netanya, where sales by contractors fell steeply.

The Ministry of Finance also reported, "Sharp falls of 19% were also posted in the Tel Aviv area, but this decrease was moderate in comparison with what happened with secondhand housing units in this area. Sales by investors in the Tel Aviv area in April accounted for over half of all secondhand housing units sold there."

Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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