The slowdown in home sales continued in the third quarter of 2017, and, according to the Ministry of Finance, the trend of a decline in the number of transactions has lasted a full year (four successive quarters). The chief economist's department in the Ministry of Finance published its quarterly review of the residential real estate sector this morning.
"In the third quarter of 2017, 23.7 thousand homes were bought, including purchases under the Buyer's Price program. In comparison with the third quarter of last year, this represents a decline of 17%. If Buyer's Price transactions are excluded, the decline is 21%. The third quarter figures mean that there have been four successive quarters in which the number of transactions has declined, in comparison both with the corresponding quarter and with the preceding quarter. By historical comparison, this is an exceptional series of figures. Since the beginning of the previous decade (the earliest figures we have available), such a negative trend has been seen only once before, between the second quarter of 2011 and the first quarter of 2012, against the background of the social protest in that period," the review states.
The Ministry of Finance survey does not cover prices, but only the number of transactions in the sector, among other things because of the decision by Minister of Finance Moshe Kahlon that only the Central Bureau of Statistics would be authorized to publish figures on home prices. The review does however state: "Although in this survey we focus on changes in numbers of transactions and not price changes, we would point out that research shows that these two trends are not dissociated. In boom times in the market, it is usually more 'liquid', with more and more frequent transactions in any given period. In periods of falling prices, the pace of transactions slows and the time spent by homes 'on the shelf' lengthens. All the same, the correlation is not immediate, and of course additional factors are at play."
In other words, the Ministry of Finance is continuing its efforts to influence the psychology of the market and to change expectations by hinting that a prolonged slowdown in the pace of transactions will at some stage have an effect on prices. This is despite the fact that so far the Central Bureau of Statistics'' figures have continued to indicate that the price trend remains upwards, if at a declining rate.
Published by Globes [online], Israel business news - www.globes-online.com - on December 5, 2017
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