Prices of new homes fall for second straight month

The Ministry of Finance believes that home prices have peaked.

The average price of a new home fell by 0.8% in December, following a sharp fall of 5.7% in November. This figure was published today by the Ministry of Finance in its State of the Economy survey.

However, according to the Ministry of Finance the number of second hand homes purchased in December rose by 2.1% compared with the preceding month. The latest report also observes an addition drop in the number of homes that are being purchased for investment purposes. It was these purchases for investment that were fuelling the sharp rise in prices over the past two years.

The Ministry of Finance said, "Sales of new apartments fell in December, but were offset by a rise in the sale of second hand apartments. It is possible that the the fall in sales of new apartments, stems at least in part, from the rise in prices by contractors and the belief by investors that the price of apartments has peaked. This belief is strengthened by the rise in assets being sold by investors."

The survey indicates a stabilizing of economic activity in Israel in December. Sales by marketing chains and revenue in the commercial sector rose by 0.1% in December. State revenues from direct taxes rose by 0.3%, while revenues from indirect taxes fell by 7.6% (although still higher than forecasts).

Published by Globes [online], Israel business news - - on January 26, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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