Third quarter home purchases show sharp recovery

Homes under construction / Photo: Rafi Kotz, Globes

Home purchases in Israel rose 54% between the second and third quarters of this year, although the rise was unevenly spread.

In the third quarter of 2020, in which Israel had its second lockdown, 25,800 housing units were purchased (excluding the subsidized "Buyer Price" program), representing an 8.6% increase over the third quarter of 2019, and the highest number of transactions for 14 quarters. The figures are from the survey of the Israeli real estate market published by the Chief Economist's Department of the Ministry of Finance, headed by Shira Greenberg.

"In the third quarter of 2020, there was a substantial recovery in the number of homes purchased, after the sharp fall in the previous quarter, when the coronavirus pandemic broke out," the survey notes. The increase over the second quarter was 54%. In the first nine months of 2020, 65,000 homes were bought on the open market, 8% fewer than in the corresponding period of 2019.

Including purchases under the Buyer Price scheme, there were 30,000 transactions in the third quarter of 2020, 5.5% more than in the corresponding quarter of 2019, and 54% more than in the previous quarter.

The geographical breakdown of the figures shows an uneven picture. "Despite the substantial growth in the number of transactions in the third quarter," the report states, "in two regions, Tel Aviv and the center, where demand is normally high, the number of transactions continued to decline in the third quarter in comparison with the corresponding quarter of last year." In the central region, the number of transactions in the third quarter of this year was 8% down on the number in the third quarter of 2019. In Tel Aviv, the decline was 3%.

The survey notes that this is the third successive quarter that has seen a decline in transaction numbers in these areas. 9,300 homes were bought in the central region in the first nine months of 2020, 17% fewer than in the first nine months of 2019.

There are, however, regions in which the market rebounded strongly in the third quarter. "The Jerusalem and Hadera areas stand out with rises in transaction numbers of 24% and 19% (although in the Hadera area there has been a sharp cumulative decline since the beginning of the year). In these two regions, the level of purchases in the third quarter was the nearest to their historical peaks," the survey states.

The survey also shows that more and more investors are entering the market. "In the third quarter of 2020, 4,300 homes were bought by investors," the survey states. "This is the highest level for such purchases since the third quarter of 2017. In comparison with the corresponding quarter of 2019, purchases by investors rose by 19%, and there was an 87% rise in comparison with the previous quarter, when the coronavirus pandemic broke out and investors were waiting for the expected reduction in purchase tax, which came into force in July. The proportion of purchases by investors was 14.3% in the third quarter, 1.5% greater than in the corresponding quarter of 2019 and 2.5% greater than in the previous quarter. Nevertheless, this proportion is still significantly lower than in the period before June 2015, when purchase tax on the purchase of an additional home was raised from 5% to 8%."

All the same, the stock of homes held by investors in Israel continues to decline, since veteran investors are selling many homes. Presumably, a fairly large proportion of these homes is being bought by new investors now entering the market. "In the third quarter of 2020, investors sold 6,000 homes, the highest level of such sales since the first quarter of 2018," the survey states. "In comparison with the corresponding quarter of 2019, there was a substantial rise, of 16%, in these sales, while sales of second-hand homes by move-up buyers fell by 1%. In comparison with the previous quarter, the number of sales by investors grew sharply, by 50%, which is similar to the growth in sales of second-hand homes by move-up buyers."

Published by Globes, Israel business news - en.globes.co.il - on December 29, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Homes under construction / Photo: Rafi Kotz, Globes
Homes under construction / Photo: Rafi Kotz, Globes
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018