June new home sales in Israel rose sharply

New homes

Sales of new apartments topped 3,000 for the first time in recent years just before the purchase tax rose.

The purchase tax hike at the end of June affected the number of new apartments purchased in that month. Central Bureau of Statistics figures published today show that the number of new apartments sold in June 2015 was substantially higher than in both the preceding month and the corresponding month last year.

Although the purchase tax hike initiative by Minister of Finance Moshe Kahlon actually took effect only at the end of June, discourse about the measure and the decision to bring forward the date on which it became effective led more than a few buyers to make their purchases earlier.

Sales of new apartments rose from 2,738 in May to 3,096 in June, a 79% jump, compared with the 1,726 apartments sold in June 2014.

The figures show that the number of new apartments purchased from contractors in June was the highest in 2015. June was the first month in recent years in which more than 3,000 apartments were sold.

In June 2014, the real estate sector was affected by then-Minister of Finance Yair Lapid's 0% VAT program. Anticipation of the program's implementation, which promised significant discounts to purchasers of new apartments, brought the purchases of new apartments from contractors to a standstill.

According to the Central Bureau of Statistics, the highest number of new apartments sold in June, 921, was in the central district, followed by Haifa with 551 and Tel Aviv with 426.

The number of apartments sold in the Haifa district was the most sold there in recent years. It cannot be ruled out that the reason is the fact that apartment prices in Haifa are still relatively low, making it an attractive focus for investors.

"A panic occurred in June, due to the Minister of Finance's mistaken policy," Yossi Avrahami Civil Engineering Works CEO Yossi Avrahami said in response to the published figures. "The sharp increase in apartment purchases in June was doe to pressure generated by investors as a result of the tax hike. This reduced the supply of apartments in Israel by 20-30% within a few days. The Minister of Finance's measure has deepened the housing crisis, because the supply has not grown in most areas in Israel."

Published by Globes [online], Israel business news - www.globes-online.com - on August 5, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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