Report compared between new housing projects
Photo: Roi Idan
Treasury: 13% drop in new home prices
Figures released by State Revenue Division on new housing projects suggest, for first time, that stalemate in housing market is turning into price reductions; apartment sales continue to plummet
Is the stalemate in Israel
's housing market turning into a drop in prices? The Finance Ministry's State Revenue Division reported Tuesday that the median price of a new apartment in Israel amounted to NIS 898,000 (about $235,000) in November 2011 – down 1.8% from October and 12.7% from November 2010.
The Treasury figures are based on a comparison between new housing projects across the country. Every month, the State Revenue Division looks into the number of new apartments and the price they were purchased for and compares them to the previous month.
In addition, the real estate market is continuing to experience a drop in sales with the number of purchased apartments standing at 6,848 – a 33.5% decline compared to November 2010.
Cooling Down
Real estate market continues to cool off: Treasury report says number of transactions down to level similar to historic low of October 2008
For the past several months, the Treasury has been reporting of a drop in the demand for apartments in Israel. So far, this decline has not been accompanied by a significant price reduction, prompting contractors to accuse the Finance Ministry of presenting misleading data in a bid to forcibly "cool down" the market.
According to the contractors, the slowdown in sales was temporary due to the social protest and the summer and High Holidays. November's figures, they claimed, would prove that the volume of sales increased and that the market was awakening.
The current report does point to a 59% rise in the volume of sales in November. It should be noted that this increase is accompanied by a 1.8% drop in prices and follows the High Holidays month, which is always characterized by low sales.
However, the increase in sales in November is significantly higher than the decline between September and October (14.7%), so there is reason to claim that the housing market is awakening.
Nonetheless, all figures imply that the record prices of 2010 did not repeat themselves in 2011, and that 2012 will likely be a year of price reductions in the housing market as well.
An annual summary points to a 17% drop in the number of apartments purchased in 2011 compared to 2010 – a 24% fall in the number of new apartments and a 14% decline in the number of second-hand apartments.
