The high-end housing market is recovering compared with the start of the war, although sales are still relatively low, reflecting the overall market, the latest Ministry of Finance chief economist quarterly survey of the real estate market finds.
The report also uncovers that there has been a rise in apartments bought by foreign residents in Jerusalem, although the total number of homes in Israel bought by foreign residents in the first nine months following the start of the war is at a low in historical terms.
In the second quarter of 2024, 111 homes were bought for more than NIS 10 million - a similar number to the corresponding quarter of 2023 and 39% higher than in the first quarter of 2024.
Tel Aviv and Ramat Hasharon head the list
Half of the homes that were purchased for more than NIS 10 million in the second quarter of 2024 were in Tel Aviv. A surprising figure in the survey was that the city with the second largest sales of luxury homes was Ramat Hasharon with 10 deals. Usually Jerusalem and Herzliya are vying for second place but in Jerusalem there was a sharp drop in deals worth more than NIS 10 million.
The chief economist explains that the jump in the number of high-end homes purchased in the second quarter compared with the first quarter was due to the fact that at the start of the war this sector suffered more than the overall housing market.
Partial data for the third quarter of 2024, which includes deals completed in July-August, indicates that recovery in deals in the luxury market segment continued in July, but in August there was a slowdown. It should that in the overall market, July was a relatively strong month, while August was weak.
As mentioned, Tel Aviv led the luxury apartment market in the second quarter of the year with a more or less normal rate in the number of luxury apartments purchased there. Ramat Hasharon was in second place, with seven out of the ten purchased homes being second-hand homes. These were mainly houses in the west of the city.
Two other cities in the Sharon region were in third and fourth place in the number of luxury homes sold in the second quarter - Herzliya and Ra'anana with nine and eight homes sold.
The chief economist found that the average price of luxury homes in Ramat Hasharon was NIS 12 million, the lowest average price in the leading cities. Jerusalem led with an average price of NIS 23 million in the second quarter and Tel Aviv was in second place with an average price of NIS 16 million.
Foreign residents bought 458 homes in the second quarter
In the second quarter of 2024, foreign residents bought 458 homes in Israel, up 43% from the corresponding quarter of 2023 and up 44% from the first quarter of 2024. However, overall only 140 more homes were bought by foreign residents so this was no dramatic rise. The only location where there was a significant rise in the number of homes bought by foreign residents was Jerusalem where 264 homes were bought, by far the biggest number of any city in Israel. The number of purchases by foreign residents in Tel Aviv remained unchanged.
The chief economist also examined the proportion of real estate investors who sold their apartments at a real loss (that is, the selling price was lower than the real purchase price), and found that, similar to the situation before the war, the region that recorded the highest rate of sales at a loss is the south, where almost a quarter of the investors who sold the apartments recorded losses.
Beersheva led the "loss table" with about 27% of investor sales in the second quarter that produced losses, followed by Ashkelon, with about 22%, Eilat 18%, and Kiryat Gat with 17%.
However, cities in the central region were also on the list, led by Petah Tikva, where about 17% of deals completed by investors resulted in losses, although the chief economist explains that only 47 deals were completed in the city. However, also in Bat Yam, Bnei Brak and Ashdod, a relatively large proportion (about 10%) of apartments were sold at a real loss by investors.
Published by Globes, Israel business news - en.globes.co.il - on October 30, 2024.
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