"There has been a clear change in direction in the housing market in recent months, alongside a reduction in sales and an increase on the supply side," says Bank Leumi in its weekly review. Sales of new homes were 10% lower in January-August 2011 than in the corresponding months of 2010, reversing the steady increase in sales in the preceding years.
The annualized rate of new home sales fell from 18,000 in August 2010 to 14,000 in August 2011, partly due to tighter regulatory measures. In addition, an increase in housing starts has increased inventory of apartments available for sale.
Bank Leumi says that the monthly supply of apartments has risen faster than expected, reaching 11 months, its highest level in the past four years. The bank has previously found that when the housing inventory reaches a supply of 10-13 months, pressures on prices ease sharply.
Bank Leumi therefore believes that the pace of rising apartment prices will ease in the coming months, and there is a strong probability that prices will fall when the housing inventory reaches a 13-month supply.
Published by Globes [online], Israel business news - www.globes-online.com - on October 6, 2011
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