Those slippery home price statistics

Dror Marmor

Three months ago we hailed "the steepest price fall since 2007". Now it turns out there was no such thing.

There was some modest consolation for home buyers in the figures for deals in the second quarter of 2017. According to figures published by the Central Bureau of Statistics, the average sale price of housing units fell from NIS 1.49 million in the first quarter to NIS 1.43 million in the second quarter of the year, a 3.8% drop (the exact difference was NIS 57,200).

This is a very steep drop, after the media (and the Ministry of Finance, of course), proclaimed a 2.9% decrease in housing prices in the first quarter. How can home prices be rising (according to that same Central Bureau of Statistics), when the average price fell? It turns out that while a considerable number of Israelis are now waiting for buyer fixed price plan lotteries (or for the lotteries' effect on the market), others have chosen to buy a cheaper, more remote, or smaller home.

Modesty, settling for less, and willingness to adjust spending to income are always praiseworthy, but we shall have to wait several years to see whether Israelis have really decided to compromise and settle for less, or whether they are simply sick and tired of high housing prices, and have bought a home, just so that they will own one.

This is not necessarily done in haste, but it can be assumed that it is also not always a completely rational decision by people looking for a roof over their heads suitable for their family. Again and again, we see Israelis not taking the price of traveling to a remote home into account in such an important decision (a price that includes both the money and the time spent on travel), the price of moving from a small home to the next one (Israelis are generally in a hurry to establish a family), and so forth.

Before proceeding to analyze the brand new data, however, we should note that the most important thing is concealed behind them (and in the archives). Last May, the Central Bureau of Statistics reported that the average home price in the first quarter was NIS 1.45 million, compared with NIS 1.49 million in the fourth quarter of 2016. This was an especially significant figure, because the reported monthly housing price index also fell (a decline that vanished later in the revised report).

"Globes" informed its readers in May that the change in the average purchase price of a home constituted "the steepest decline since 2007." Three months later, however, the first quarter average was upwardly revised, and it turns out that it did not fall at all; in point of fact, the updated average price for the first quarter published last week showed a rise of NIS 2,000 in comparison with the preceding quarter.

But who remembers the first quarter figures and the now canceled fall in prices? Better to take comfort in the new and even sharper decline (3.8%), before it, too, vanishes with next quarter's revision.

Published by Globes [online], Israel Business News - www.globes-online.com - on August 21, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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