First official indications of the effect of the coronavirus pandemic on the housing market emerge from the Ministry of Finance survey of the sector for February 2020. The survey contain a note to the effect that initial data for March point to a sharp decline in the number of transactions both in new and secondhand homes. "The rate of decline that is emerging is the largest since July 2015, when the number of transactions hit a low because purchases by investors were brought forward to June in order to avoid an increase in taxation rates on investment transactions," the Chief Economist's survey states.
One of the problems of measuring changes in the real estate market is the large time gap between a deal being signed and it being reported to the Tax Authority, which can be a month or more. This is why real estate market figures released by the Central Bureau of Statistics and the Ministry of Finance lag along way behind what is happening on the ground. Official figures on the market in March will appear only next month, and they will presumably be distorted to some extent by the Passover holiday and the lockdown.
All the same, the real estate market is sagging, which is no great surprise. Contractors' sales offices are shut, realtors are idle, and even rental deals are going slowly. If the relaxations of the lockdown continue, there may perhaps be something of a thaw. Still, in a situation of uncertainty for many people, when employees are being put on unpaid leave or laid off, the housing market cannot be expected to function as usual.
In June 2015, the number of housing transactions in Israel fell by 43%, but, as mentioned, this was because the number of transactions the previous month was exceptionally high, because of the Ministry of Finance's announced intention of raising purchase tax on investment purchases by 60% and more. The circumstances now are quite different, and the assessment is that the drop will become steeper, because most of the deals done in March were already in the pipeline in February, before the coronavirus emergency in Israel had fully started. April, in which the Passover holiday fell, will probably make history for the low number of housing transactions taking place, but so far there are only a few reports from the field, and no solid data.
Published by Globes, Israel business news - en.globes.co.il - on April 22, 2020
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