Only 8,000 residential real estate deals took place in August 2018, including 700 discounted homes in the framework of government programs (Buyer Fixed Price Plan and Target Price Plan). The number of deals was 3% fewer than in August 2017 and 5% fewer than in July 2018. Excluding discounted homes, the figures show a steeper decline in housing sales on the open market: 5% in comparison with August 2017 and 8% in comparison with July 2018. The number of deals in August was the fewest since 2014, which was affected by anticipation of then-Minister of Finance Yair Lapid's zero VAT plan. The figures are from a review of the real estate sector published today by the Ministry of Finance chief economist.
The August figures show that the real estate sector is still slowing down, with a downtrend in deals by investors and move-up buyers. The chief economist department writes that most of the decrease in housing sales occurred in sales of housing units at market prices, not in sales under the Buyer Fixed Price Plan.
The figures show that 2,400 new homes were sold in August, down 7% in comparison with July, but unchanged in comparison with August 2017. The chief economist department believes that most of the drop in sales resulted from increased sales of discounted homes under the Buyer Fixed Price Plan: "The change in sales by contractors at the monthly level was very likely affected to a large extent by sales in the framework of the Buyer Fixed Price Plan, especially when the current year is compared with the corresponding period last year, since the trend in annual pace of sales in the Buyer Fixed Price Plan framework is upwards. When these sales are excluded, we therefore find that sales by contractors at market prices were down 17% in comparison with August 2017. Note that since October 2016, the number of new housing deals at market prices has continuously fallen by rates in excess of 10%, except for May and June 2018, when the decline was 1% and 9%, respectively." The review added, "The rate of decrease in August is the greatest since the beginning of the year."
At the same time, the Ministry of Finance examined sales of new housing by contractors in the first eight months of the year. It was found that 13,500 new homes were sold during this period, 11% fewer than during the corresponding period last year and 40% fewer than in the corresponding period in 2016. The Ministry of Finance stated, "This is the lowest level of deals for new homes in the first eight months of the year since at least the beginning of the previous decade."
Published by Globes, Israel business news - en.globes.co.il - on October 21, 2018
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