Homes sales spurt in April

Buying a home  photo: Shutterstock

Young couples are dominating Israel's housing market.

Indications are increasing that the impending election is heating up the real estate market. After figures published by the Central Bureau of Statistics showed a 1.5% increase in prices this year before the elections in April, the Ministry of Finance chief economist's department today reported that sales of homes grew 37% in April, compared with April 2018. Young couples continue to dominate the market, accounting for over half of the homes purchased in April, mostly on the free market.

8,300 homes were purchased in April, even though the Passover holiday fell during this month. The number was less than in March, but larger than the number in April in most of the past 13 years - only in April 2013 and April 2016 were more deals made.

Of the 4,500 homes purchased by young couples, only 1,100 were under the Buyer Fixed Price Plan. A survey of the fourth quarter of 2018 found that the Buyer Fixed Price Plan had boosted not only purchases of new discounted apartments, but also the secondhand housing market, at the expense of free market purchases of new homes.

Purchases by young couples on the free market grew by no less than 52% in April, compared with April 2018. The central district stood out with an increase of over 70%, although a fifth of the buyers in this district were not eligible for discounted apartments under the Buyer Fixed Price Plan. Among those who were eligible, most of the purchases were concentrated in cities where apartments subsidized by the government were scarce.

Petah Tikva and Holon, two cities with no available Buyer Fixed Price Plan housing, accounted for nearly half of all the purchases by eligible young couples in the central region. Rosh HaAyin, which has a large supply of apartments subsidized by the government, accounted for 10% of the purchases by young couples on the free market in the central region.

Analysis of salaries of these purchasers in Rosh HaAyin shows that their salaries were fairly high. This seems to indicate that young couples who are able prefer not to buy apartments under the Buyer Fixed Price Plan. Salaries were highest among those buying homes in Ramat Gan.

One surprising finding by the Ministry of Finance chief economist was purchases of apartments by poor young couples in Jerusalem. The lowest earning 20% of these buyers earn less than NIS 2,000 a month. How did they manage to buy apartments when the average price is NIS 1.5 million?

The entry in force by young couples into the secondhand housing market also enabled move-up buyers to look for new homes for themselves. They increased their purchases to 2,900 homes in April, 30% more than in April 2018, especially in Tel Aviv and Netanya.

The only sector not affected by the elections was investors, who are apparently waiting for the next government in the hope that it will relieve the heavy tax burden imposed by Minister of Finance Moshe Kahlon in his last term. Investors bought 970 housing units in April, but sold 1,600 housing units, continuing a trend that has persisted for the past three years in which the stock of housing held by investors, some of which is rented out, has continually shrunk. This stock has been reduced by 17,500 housing units.

Published by Globes, Israel business news - en.globes.co.il - on June 17, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Buying a home  photo: Shutterstock
Buying a home photo: Shutterstock
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