The real estate market is still waiting for clarification on the plan for 0% VAT for first-time homebuyers, and meanwhile buyers are stepping on the brakes. According to figures published by the Ministry of Finance today, just 7,500 homes were purchased in May, a low not seen for that month since 2005. Initial figures for June indicate a decline to the lowest level since June 2003.
The number of deals in May was 15% higher than in April because of the Passover holiday, which was in April this year. In comparison with May 2013, the May 2014 figures represent a drop of 40% in home purchases.
"The sharp decline encompassed both the new homes segment and second hand homes," the Ministry of Finance said, "The decline in transactions in comparison with May last year was led by first-time buyers, with a fall of 43%. The decline was actually made more moderate by the fact that in Tiberias and in the south of the country there were sales of apartment by public housing companies Amidar and Amigur. Excluding sales of public housing, the fall in purchases of first homes amounts to 46%, which compares with a fall of 36-38% in purchases by investors and people moving up market."
In the geographical breakdown, the Sharon area stands out with a 54% decline in purchases by young couples in comparison with May last year.
Published by Globes [online], Israel business news - www.globes-online.com - on July 28, 2014
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