Totally predictably, while the government was slowly advancing its plan to raise purchase tax for investment home buyers, investors fell on the market, and by the end of November snapped up thousands of apartments. According to the figures from the survey by the chief economist at the Ministry of Finance, in October, investors bought no less than one third of all the homes bought on the market. The number of investment homes bought was the highest in 6.5 years.
14.4 thousand homes were purchased in Israel in October this year, a peak not seen since June 2015, when in similar circumstances investors poured into the market before a rise in purchase tax came into force.
Developers, realtors and lawyers were already reporting the phenomenon from the field. Investor who realized that the government would shortly raise purchase tax on them from 5-10% to 8-10% rushed to make purchases in greater and greater numbers as the date for approval of the new tax rates approached. About a quarter of the investment purchases in October - 1,186 transactions - took place on the last day of the month - when the official decision on raising purchase tax was reported.
What happened? The press and media reports that purchase tax might be raised accompanied the market for several months, but the official declaration came as part of the presentation of the government's housing program on October 31.
The city leading in purchases of investment homes is also the most expensive - Tel Aviv, where the change in purchase tax will be greatest. 456 investment homes were sold in Tel Aviv in October, more than in August and September combined, and 56% more than the average monthly number of investment purchases in the city in the first eight months of the year.
Tel Aviv is followed by Haifa, with 349 investment purchases in October, 140% more than the monthly average; Bat Yam, with 293 investment transactions, 148% above average; and Beersheva, with 266 investment transactions, 169% above the average for the first eight months.
Investors also sold a great many homes in October. No fewer than 2,900 investment homes were sold, and that too is the highest figure since June 2015.
The chief economist says that many of these sales were to other investors, in a rush to beat the tax rise. Altogether, since the beginning of the year, the stock of housing in the hands of investors has risen by 3.3 thousand units.
Published by Globes, Israel business news - en.globes.co.il - on December 15, 2021.
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