Tel Aviv bucks trend in home purchases for investment

Tel Aviv

The proportion of investors among home buyers in Tel Aviv rose 17% in December, the Finance Ministry chief economist reports.

The proportion of investors among housing buyers in Tel Aviv rose 17% in December, according to the weekly survey published today by the Ministry of Finance chief economist.

The increase runs counter to the nationwide trend and the efforts by Minister of Finance Moshe Kahlon to cut back on investors in housing, among other things by raising the purchase tax on housing for investment last summer.

Kahlon explained his measures by stating that there was unfair competition between investors and young couples for apartments. The Ministry of Finance chief economist, however, said that investors in Tel Aviv district apartments were not competing with young couples for the same apartments, because they were buying much more expensive apartments than young couples and people moving to better housing could afford. Figures from the survey show that the average price of a new apartment purchased for investment purposes in December was NIS 3.7 million, 62% more than the average price of an apartment purchased for residential purposes (a single apartment).

The survey figures show that 10,600 housing units were purchased in December - 7% more than the number of deals in November, but 6% fewer than the number of deals in December 2014. The jump in the number of deals in Upper Modi'in and Harish was among the main causes of the boom in deals in the Jerusalem and Hadera districts, of which these new communities are part. The average price of an apartment in Harish and Upper Modi'in is NIS 1 million.

The nationwide proportion of investors among apartment buyers in December was 21%, compared with 20% in November. The rise in the nationwide percentage is completely attributable to the local increase in Tel Aviv, where the proportion of investors rose from 34% in November to 40% in December. Excluding Tel Aviv, the proportion of investors was still 12% below the proportion a year ago. The figures also show that the inventory of apartments waiting for purchasers has sunk to its lowest point since 2012. Apartments waiting for purchasers are the old apartments owned by people who have bought better housing.

Published by Globes [online], Israel business news - www.globes-online.com - on February 28, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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