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Photo: Herzl Yosef
Bubble bursting? Apartment prices drop 11%
Housing minister says rise in availability of land for residential construction projects main reason for decrease in flat prices
In contrast to reports claiming that apartment prices in Israel are on the rise, data revealed by the Housing and Construction Ministry Wednesday show that as of January 2012 the average price of new apartments dropped 11%, while the average price of second-hand flats decreased by 6%, compared with record-high prices recorded in April 2011.
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According to the data, in January of this year apartment prices decreased by an average of 8%, and the trend continued throughout the month of February.
The average price for a new apartment in January 2012 stood at NIS 1.365 million ($370,000), while the average price for a second-hand flat was NIS 1.02 ($270,000) million.
"An increase in the availability of land designated for residential projects has led to a record-high number of construction starts," Housing and Construction Minister Ariel Atias said. "Some 80,000 apartments are currently under construction – the highest number since June 1999."
According to the minister, "apartment prices have dropped because supply is outweighing demand. The availability of land is affecting the real estate market more than any initiative. Young couples and people who have yet to purchase apartments are the main beneficiaries of this trend."
