December sees 48% drop in TA flat sales

Despite decline, average price of new apartment in 2010 was about 3.5% higher compared to 2009

Reuters | Published: 01.31.11, 14:56

The real estate market is going into a freeze, apartment prices are dropping and the rent prices in central Israel, the Sharon region and Jerusalem are going up, according to figures released by the Finance Ministry for the month of December.

The purchase of new apartments in the Tel Aviv area plummeted by 48% and by 10% in the Sharon region. December saw a general drop of about 7% in the number of deals signed compared to November, while the prices of new apartments dropped by 0.6% compared to November.

The decline rate may be lower compared to the three previous months, but the sharp drops were in the Jerusalem area (-3%) and Tel Aviv area (-1.8%). Stability in prices was recorded in the Sharon region, while in the Haifa area prices continued to rise, although moderately (0.2%).

Despite the decline, on an annual average the price of a new apartment in 2010 was about 3.5% higher compared to 2009.

While the purchase of apartments for residential purposes dropped by 10% compared to November, the total number of apartments purchased for investment rose by 2%. The investors' part in the real estate market thus grew, reaching close to one-third of investments, similar to the record levels recorded in the third quarter of 2009, following an almost continuous drop since the last quarter of 2009.

Assuming the jump in the purchase of apartments for investment in the second half of December stemmed from early purchases due to the expected tax increase, a significant drop could be expected in the purchase of apartments for investment purposes in early 2011.

The rate of apartments sold by investors in December saw a moderate drop, excluding the Tel Aviv area and central area, which recorded a significant decline.