New homes sales up 5% in September-October

New homes in Lod Photo: Eyal Izhar

Home purchases for investment remain low, a trend likely to be reinforced by the Bank of Israel's interest rate hike.

New home sales in Israel rose 5% in September-October in comparison with the corresponding period of 2017, as new home prices fell. The Chief Economist Department in the Ministry of Finance released its analysis of the real estate market in October yesterday, showing that the number of homes sold in that month this year was nearly 40% higher than in October 2017. The figure for October this year was however affected by the fact that there were no Jewish holidays in that month. A comparison that includes the holiday periods in both years (September-October) shows, as mentioned, only a 5% rise.

Sources that monitor the real estate market told "Globes" that two projects stand out in the sales figures: a regular project in Rehovot in which attractive discounts were offered of up to 10% on the average price of an apartment in the area; and a Buyer Price program project in Netivot. In that project, half of which is designated for the open market, apartments were sold at 20% below market. Those two projects account for nearly 200 of the total of 3,100 new homes sold in Israel in the September-October period.

Ministry of Finance sources told "Globes" that it was difficult to draw conclusions from one period's data, and pointed out that since mid-2016 there had been a continual fall in home sales on the open market, with contractors still living off the profits they accumulated in the past decade. The same sources also said that there had been a 30% drop in home sales in Jerusalem in September-October this year in comparison with the corresponding period last year.

Purchases by investors remained at their recent low levels, and were 24% below the figure for September-October 2017. The data are for a period before the Bank of Israel raised its interest rate to 0.25% and predicted further rate rises, which is likely to have a further deterrent effect on purchases of homes for investment.

For move-up buyers, the period between signing a contract and the actual sale has lengthened. For 40% of the new homes sold in September-October, the period was at least two years, which compares with 12% at the beginning of this year. This may indicate more pre-sales by contractors in order to fix the prices of the homes they are building on the assumption that prices are on a downward trend.

Published by Globes, Israel business news - en.globes.co.il - on December 11, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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New homes in Lod Photo: Eyal Izhar
New homes in Lod Photo: Eyal Izhar
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