Sales of New Homes Falls in Israel, as Mortgage-Borrowing Declines2 min read
On Sunday, the Central Bureau of Statistics (CBS) released a housing report showing that demand for new homes is declining, after housing prices had been rising for months.
House sales down
The report disclosed that there were 10,970 new units that were sold between April and June. This was a 14.4% drop, as compared to the previous quarter from January to March.
House prices have climbed up by almost 15.4% this year, which has made it immensely difficult for new buyers to come up with the down payment required.
Higher taxes have also been imposed on those who are purchasing properties for investment purposes and this is also taking a toll on home sales.
The CBS report disclosed that there has been increasing interest in properties outside the central regions in Israel.
In the April to June quarter, the housing markets that recorded the fastest growth as compared to the January to March quarter were Kiryat Balik, Dimona, Rosh Ha’ayin, Lod and Yehuda.
All of these had grown by almost 50%, which suggested that home buyers are looking to get value for money, which has driven them to look beyond the big cities.
In the April and June quarter, almost a quarter of the new apartments that were sold were found in the central region of Israel.
These included 624 sales in Netanya, 561 sales in Tel Aviv-Jaffa, 489 sales in Ashkelon, 473 sales in Ramat Gan and 464 sales in Jerusalem.
The biggest decline in transactions that had been recorded in this quarter, as compared to the previous one, were in Beit Shemesh, Rishon Lezion and Ashkelon.
As for the highest number of apartments that were sold, these included 1,206 units in Tel Aviv-Yafo, 1,221 units Ashkelon and 1,117 units sold in Netanya.
The role of the government in the housing market has increased in the form of affordable housing schemes.
25.5% of the apartments that were sold in the April to June quarter had been through government subsidies.
There was another indication that the demand for homes was falling and people were turning towards cheaper properties.
It was seen in the form of mortgage, which had declined to NIS 10.1 million in July, as opposed to NIS 11.9 billion.
However, it cannot be concluded if the rise in interest rates is responsible for this fall in borrowing, but it does seem plausible in the case of falling property transactions.
Moreover, the government is also speeding up the labyrinth development process by focusing on constructing new apartments and doing it quickly.
In the April to June quarter, construction had begun on 5,000 apartments, which was an increase of 5%, as compared to the previous quarter.
Even though the numbers have significantly improved, it should be noted that these are still not close to the 70,000 new builds that have been set as a target by politicians.
According to experts, this figure is required in order to bring down housing prices, as well as buyer demand.