Foreign purchases of Israeli homes at 13-year low

new homes
new homes

Home purchases by overseas residents in January-August 2016 were down 36% on 2015.

Is the Israeli housing market about to see a change in trend? In the first eight months of this year, overseas residents bought 1,566 houses and apartments in Israel, which represents a decline of 36% in comparison with the corresponding period of 2015 and a low not seen since 2003. The figures are from the weekly survey of the chief economist at the Ministry of Finance.

The Ministry of Finance says that this year's fall in the number of home purchase by overseas residents is due, among other things, to the high number of purchases made last year in anticipation of the rise in purchase tax on second homes in June 2015. The proportion of overseas investors in the Israeli real estate market fell to 2% in the first eight months of 2016, a level only 0.2% above the low recorded in 2002, when the second intifada was raging.

All the same, the chief economist points out that the proportion of overseas investors among purchases of investment homes in June last year was 4.1%, lower than the 6.1% peak recorded in 2007. "Although the impending tax rise at the end of June 2015 led to deals being brought forward by overseas investors as well, this was still not enough to raise their share of total deals done," the Ministry of Finance document says, "One possible explanation for that is the short notice given of the tax rise, which created greater difficulties for overseas residents than for locals."

The Ministry of Finance figures also show that the decline in the number of home purchases by foreign investors was accompanied by a decline in prices over the first eight months of 2016, especially of secondhand homes, and particularly in Netanya, where overseas buyers chose substantially cheaper apartments than they had in the past.

The Ministry of Finance survey comes two days after the Central Bureau of Statistics reported that in the first nine months of this year demand for new homes fell by 7.5% in comparison with the corresponding period of 2015.

Published by Globes [online], Israel business news - - on November 15, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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