A survey by the Chief Government Appraiser provoked an outcry last week. The survey in question is a quarterly one in which the Chief Government Appraiser examines transactions carried out during the previous quarter in sixteen cities in Israel in new and secondhand four-room apartments. The current survey, from an official and respected source, covers the second quarter of the year, and indicates that home prices in Israel continued to rise, by 2.5% in three months to be precise.
The survey also found that, for the first time, the price of a four-room apartment in Tel Aviv crossed the NIS 3 million threshold. These are difficult numbers for the Ministry of Finance, which is trying to bring home prices down, and even more difficult for would-be home buyers who are sick of promises and who have lost faith in government programs that, according to the Chief Government Appraiser, are so far not working.
At the same time another official state body, similarly respected, namely the Central Bureau of Statistics, published its own quarterly index of home prices. The index, based on transactions in 67 places, indicated the opposite trend. According to this index, average home prices actually fell in the second quarter, by 1.3%, after a long period in which the index had consistently risen.
So we have a Chief Government Appraiser who says prices are rising and a Central Bureau of Statistics that says they are falling. Who's right? Probably both of them. The Chief Government Appraiser tracks only four-room apartments in selected cities, and it would seem that his findings reflect the situation in that segment. The Central Bureau of Statistics tracks more places and all types of homes and combines them all together in its computation. That's the nature of statistics. The result depends on what you examine.
Which is more believable? Both bodies are equally believable. Who's right? Both of them are. So what is the real state of home prices in Israel? That's something we will only know for sure when Israel follows the wider world in creating a single, uniform, representative index providing a comprehensive picture of price trends.
Who are the people being quoted as saying that the Ministry of Finance's programs have completely failed and that prices continue to climb? Lawyers, who deal in real estate, contractors, who build homes, surveyors, who deal in real estate, developers, who sell homes, opposition members of Knesset, who exploit any opportunity to kick the government, and so on.
Have you heard any of these people commenting on the Central Bureau of Statistics figures? The vast majority have not. Apparently all of them only saw the Chief Government Appraiser's survey, or that was what was convenient for them to see.
The bottom line is that it is always, but always, important to pay attention not just to the figures but to the person citing them and the interests they represent.
Published by Globes [online], Israel business news - www.globes-online.com - on August 23, 2016
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