Israel’s residential real estate market is back to the level of activity it was at before the outbreak of war. Last month, new mortgage loans totaled NIS 6.2 billion, which is similar to the monthly average in the first nine months of last year, according to figures released by the Bank of Israel. The Bank of Israel’s mortgage statistics are a month ahead of the Central Bureau of Statistics and Ministry of Finance chief economist’s surveys of the housing market.
The March mortgage loans figure is the highest since August last year, and is in line with reports from people in the real estate sector of substantial recovery in the market in the past few months. The chief economist’s transactions survey published on Thursday, which as mentioned does not include March, shows that in the first two months of this year there was a significant rise in the number of purchases of new homes, while the secondhand home market was stagnant.
There are two main explanations for the rise in purchase of new homes. One is "20-80" financing offers by developers, that is, a down payment of 20% of the price of a home when the contract is signed, and payment of the remaining 80%, without index-linkage, when the home is handed over. This in effect conceals a reduction in the apartment price, which does not happen in the secondhand market. The other explanation is the fact that many secondhand apartments do not have a room or annex proofed against air raids, which in these times buyers are not prepared to accept.
Still, despite the rise in transaction numbers, examination of the figures shows that the market is still slow, and that the number of deals (7,800 monthly on average) is 15% lower than the multi-year average. Although, as mentioned, the total of new mortgage loans in March was the highest for seven months, it was still 8% below the total for March 2023, 54% below the total for March 2022, and 28% below the total for March 2021.
The Bank of Israel’s figures, released on Thursday, do not provide details of how much of the total of home loans was taken by investors, how much by buyers of subsidized homes, and how much by buyers in the open market who are not investors. These figures will be published in two weeks’ time.
Published by Globes, Israel business news - en.globes.co.il - on April 14, 2024.
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