Rising apartment prices
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Prices for 4-room flats jump 17%
Sharpest increase seen in Tel Aviv, with 32% rise in prices, but prices in other cities also skyrocket with 23% increase in Beersheba, 20% increase in Haifa and Hadera
Prices for four-room apartments in Tel Aviv rose 32% in the second quarter of 2010 in comparison with the second quarter of 2009, according to the 16-city study of apartment prices performed by the chief government real estate appraiser, Eyal Yitzhaki.
The figures show that second-hand, four-room apartment prices in the cities surveyed rose by an average of 17% in the past year. Tel Aviv saw the sharpest rise in apartment prices, moving from NIS 1,757,000 (about $466,900) in the second quarter of 2009 to NIS 2,312,000 (about $614,400) in the second quarter of 2010.
Haifa saw a 20% jump in apartment prices during the same period, increasing from NIS 823,000 (roughly $216,710) to NIS 985,000 (about $258,530). Beersheba apartment prices increased 23% from NIS 508,000 (about $135,000) to NIS 626,000 (about $166,360).
Prices in Jerusalem rose by 19% from NIS 1,354,000 (about $359,800) to NIS 1,617,000 (about $429,700). Petah Tikva apartment prices also rose at a similar rate of 18% from NIS 1,112,000 (about $295,500) to NIS 1,311,000 (about $348,400).
The smallest rise in apartment prices was listed in Eilat (3%) and Holon (8%).
Supply-side pressures
During the said period, the Consumer Price Index not including housing rose by 2.2%.In addition to the rate in price change in the various cities, a level of price divergence typical of cities was found, indicating differences in demand for various areas in each city and differences in socio-economic and physical characteristics among each city's apartments.
A particularly high level of price divergence was found in Tel Aviv, Jerusalem, and Haifa, indicating a gap between luxury areas and inferior areas in each city. Relatively low price divergence was seen in Modiin and Rehovot, stemming for the relatively homogenous populations living in these cities and relatively low levels differences in the quality of building.
The government appraiser noted the low inventory of non-saleable apartments, which is about 13,000 units, as the main factor putting continual upward pressure on apartment prices. On the demand side, many factors exist with often contradictory effects: forecasts of increased growth, forecasts of increase real interest rates, and forecasts of government intervention to lower apartment prices. The effect of these factors is apparently weaker than the effect of supply factors.
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