Home purchases continue to decline

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Finance Ministry figures show a low level of transactions in October-November 2016.

The slowdown in the residential real estate sector continued in October-November, when the lowest number of deals in any period in 2016 was recorded. Initial figures for December 2016 also indicate a low level of transactions. The figures are contained in the Ministry of Finance chief economist's survey of the residential real estate market, released today.

According to the survey, just 4,700 homes were purchased in October, the lowest number since October 2011, when the effect of the social protests of the summer of that year was still being felt. The Ministry of Finance stresses that the number of transactions in October 2016 is low even after allowing for the fact that the Jewish holiday season fell in that month.

"Since 2002, there have been only five months in which there was a lower number of transactions than there were last October," the survey states.

In November, there were 8,900 transactions, 9% fewer than the monthly average for January-September 2016, and 10% fewer than in November 2015.

The Ministry of Finance believes that the fall in the transactions numbers will lead to a further decline in mortgage taking in the coming months, as there is a delay between the time that a purchase contract is signed and the time that a mortgage loan is obtained.

The Ministry of Finance continues to attribute the drop in residential real estate transaction numbers to a decline in purchases by investors. "In October, only 800 homes were bought by investors, the lowest ever level on a historical comparison for this measure."

The decline in the number of investment purchases was particularly notable in Beersheva, where the proportion of real estate transactions that were for investment purposes in October-November 2016 fell to just 14%, the lowest proportion in any region. At the peak of investment activity in this region in 2009, investors accounted for more than one third of all residential real estate purchases, the Ministry of Finance survey states.

Published by Globes [online], Israel business news - www.globes-online.com - on January 9, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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