October sees 40% drop in TA home sales
Real estate market continues to cool off: Treasury report says number of transactions down to level similar to historic low of October 2008
Reports issued by government ministries continue to point to a cool-down in Israel's housing market.
According to the Treasury's Orot Adumim ("Red Lights") report published Sunday, the number of real estate transactions totaled only 4,600 in October 2011 – just slightly above the historic low of October 2008, on the eve of the global financial crisis.
A drop was also recorded in the purchase of apartments for investment purposes, and the prices of new flats were down 1.3% compared to September. A 15% drop was recorded in the number of transactions compared to September, and a 50% drop compared to October 2010.
The Treasury report noted that when viewing this decline, one must take into account the fact that the High Holidays took place in October this year.
According to a geographical analysis, the sharpest decline in the number of transactions was recorded in Tel Aviv, which was the only area that managed to maintain stability in apartment sales in the third quarter due to a rise in second-hand apartment sales.
October saw a 40% drop in the sale of second-hand apartments in the Tel Aviv area and a 50% decline in the sale of new apartments.
Central Israel and the Shfela region recorded a 2% drop in prices, while the Sharon region saw a moderate decline of 0.7% following a 2.3% fall in the previous month. Stability was recorded in the Jerusalem area following a 2% drop in the previous month.
Investors leaving Beersheba
The purchase of apartments for investment purposes recorded a sharper drop than the one recorded in the total number of transactions in October: A 21% decline compared to September and a 57% fall compared to October 2010.
The Treasury's goal to drives investors away from the real estate market appears to be working on the ground: According to the report, investors comprised less than 25% of the market in October – compared to 27% in September.
The Beersheba area, where investors have been very dominant until recently, recorded a 30% drop in the number of apartments purchased for investment purposes compared to September, and a 70% drop compared to October 2010.
Investors make up about one-fifth of second-hand apartment sellers on average. In the Beersheba area, they make up about 30% of the market.
Treasury: Improvement in economic activity
The report also reviews the Israeli economy's general economic activity. According to the review, the unemployment rate continued to fall, reaching a 5% low.
Exports rose slightly in November following four months of declines, while taxation figures remain lower than forecasts and the accumulated deficit since the beginning of the year totals some NIS 3.3 billion (about $860 million).
According to the review's authors, the ongoing economic activity figures released by the Central Bureau of Statistics usually pointed to an improvement in the situation: The industrial production index recorded an annual increase of 2.5%, which was led by a higher increase of 4.6% in the high-tech industry.
They warn, however, that a review of the third quarter of 2011 raises fears as to the Israeli economy's main growth engines: The general export of goods and services fell by an annual 16.9%, while private consumption rose by only 0.9%, reflecting a drop in the level of private consumption per capita.
The capital market recorded a drop in leading stock market indices in November following the disappointment with developments in the European debt crisis, although some indices recorded a slight increase in December.
The public's state of mind, however, recorded a significant decline in November following a significant improvement in October. The ISM Manufacturing Index recorded a sharp drop, pointing to estimates of a decline in industrial activity.
A drop was also recorded in the Consumer Confidence Survey following an improvement recorded in October.
Calcalist reporters Shirly Sasson-Ezer and Amnon Atad contributed to this report
