Housing purchases down 18%

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Purchases of homes by investors in Israel were down 18% in April and May, the Finance Ministry reports.

The downtrend in housing purchases by investors continues, the general volume of deals is falling, and the figures show a higher socioeconomic level among purchasers of housing in buyer fixed price projects. These findings were reported in a residential real estate survey for April-May 2016 published today by the Ministry of Finance chief economist department.

The Ministry of Finance says that the lower volume of purchases in May 2016, compared with May in previous years, resembles periods in which the real estate sector was waiting and stagnating, such as during the social protest and the period of waiting for former Minister of Finance Yair Lapid's 0% VAT program (which never materialized). The Ministry of Finance also points out that for the first time, it appears that the number of housing purchases by investors equaled the number sold by investors, and cites the government projects for selling housing at a discount as the main reason for it.

According to the survey, the general number of deals fell from 11,000 in March to 9,000 in April-May 2016, an 18% decrease. A comparison with April-May 2015 also showed a 5% drop in the number of deals.

According to the Ministry of Finance figures, most of the fall in the number of deals resulted from a 20% decline in the sales of new housing, while the fall in sales of secondhand housing was a more moderate 14%.

The Ministry of Finance pointed out that only in May 2011, during the social protest, and in May 2014, during the wait for the ill-fated 0% VAT plan, was the number of secondhand housing deals lower. "One of the explanations for this low level of secondhand housing deals could be the sharp drop in purchases by investors, whose main activity in most areas was in the secondhand housing segment," the survey stated.

The proportion of purchases by investors in April-May was 20%, slightly under the proportion in the first quarter. In quantitative terms 1,700 housing units were sold to investors, down 27%, compared with March, and 20%, compared with April 2015.

In May, however, purchases by investors rose by a modest 4%, although the Ministry of Finance notes that this increase was not significant in quantitative terms, amounting to a mere addition of 70 housing units.

Published by Globes [online], Israel business news - www.globes-online.com - on July 10, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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