One third of apartments purchased during the second quarter of 2009 were for investment, according to a Ministry of Finance report obtained by "Globes". This is a record proportion, culminating a trend that began in 2002, when 22% of apartments were bought for investment.
The report attributes the growth in apartment purchases for investment to the tax reform enacted in 2003 and the economic crisis that began in mid-2007, which led to the slashing of interest rates to virtually zero, and the plunge in stock markets, prompting a land rush by investors.
The Central Bureau of Statistics reports that housing prices rose by 2.4% in August 2009, by 13.3% over the preceding 12 months, and by 27% since mid-2007. The Ministry of Finance reports conforms to a report by Geocartography Knowledge Ltd., which said that investors are behind the rise in housing prices over the past year.
The Ministry of Finance says that a change occurred in Israel's property investment map in 2008, when investors began to abandon Tel Aviv and the central region in favor Haifa and Beersheva, probably because returns on investment are higher outside the Dan region.
As for Tel Aviv, the report says that more than half of new apartments sold in the city were bought by investors, compared with the national average of 30%. In Jerusalem, investors bought 24% of all apartments sold, because housing starts in the capital do not target investors, in contrast to the luxury projects under construction in Tel Aviv. This difference is seen in the gap in prices for new apartments between the two cities, a price gap that does not appear for second-hand apartments.
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2009
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