1. No one is denying that Minister of Finance Moshe Kahlon is responsible for halting the increase in housing market transactions. His obsessive belligerence towards anyone pointing out that as of now the fall in sales in not being translated into a similar drop in prices, however, is embarrassing and outrageous. Someone who posts a clip on Facebook celebrating a 0.2% decrease in housing prices according to Central Bureau of Statistics figures should be able to cope with other numbers published by that same Central Bureau of Statistics showing that housing prices have risen 12.6% since the current government took office in April 2015.
Everyone is now waiting for today's figures from the Central Bureau of Statistics for housing starts and completions in the first quarter of 2018, which will give everyone a clear look at the state of the housing market: the contractors, homeowners, everyone who makes a living from real estate, the Ministry of Finance, people who do not own homes, and people in the capital market who want us to prefer investing in securities to four walls.
The preceding quarters indicated that the distress of the contractors, who are selling a lot less, has shut down many construction sites. If it appears that housing starts are still short of a reasonable level, despite the buyer fixed price plan - the Ministry of Finance itself set a target of 60,000 housing units a year - even Kahlon will have to finally wonder whether his arrows are being shot in the right direction.
2. The Ministry of Finance's biggest problem is that it blames everything on the greed of interested parties and refuses to accept that people are criticizing its measures out of concern for young couples and the housing market.
According to the Ministry of Finance's own figures, three years after the buyer fixed price plan began, 44,529 apartments have been raffled off. This is a respectable number of housing units, but it will not hurt to admit that the rate is far from impressive and supplying the demand - 123,954 Israelis are now registered for the program.
As of now, it is hard to ignore the fact that the buyer fixed price plan is offering subsidized apartments to a few happy non-homeowners but is at the same time hampering the effort to increase marketing of land. That is what happens when land tenders have to be specific down to the last detail because they require the contractor to commit to a final price per square meter of construction in the apartment. In addition, not only are contractors demanding a maximum of clarity and avoiding participation in dozens of tenders that they don't like, but local authority heads are recognizing the pressure and are generating a flood of pressures and demands - most of which are justified, incidentally - before the tenders are published and more young families put into them.
3. A month ago, when the Ministry of Finance celebrated six consecutive months of falling housing prices, we warned of what was to come.
The spoiler we reported then said that in an annual calculation, even if housing prices tread water and rise in the coming months, the minister of finance will continue celebrating a drop in housing prices for the year. After prices rose 1.6% in June-September 2017, it is obvious that when the months in 2017 are replaced by months in 2018, the price decreases will be greater even if the monthly indices show steady prices or even slight rises.
Immediately after the Central Bureau of Statistics reported that housing prices did not change in April and a revision of the figures for March from a 0.2% decrease to a 0.1% increase, Kahlon could immediately post a tweet saying, "The pace of the yearly decline was doubled and the greedy self-interested people will try to tell you otherwise." There was nothing about the minimal change from 0.1% to 0.2% and nothing about the halt and reversal of the downtrend in housing prices in the past two months.
What about the price index for new housing units, which went up 1.6% this time? It is hard to take seriously a price index launched only six months ago with great fanfare with the clear purpose of being a spearhead showing a downtrend, mainly due to the inclusion of subsidized buyer fixed price plan apartments in the new index, but one month after it showed another steep fall (1.2%), it posted an unexpected 1.6% rise. Check what is happening with your formulas and get back to us.
Published by Globes [online], Israel business news - www.globes-online.com - on June 19, 2018
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