More young couples buying apartments
Housing market recovery continues in second quarter of 2012 with 9% increase in number of real estate deals, Treasury reports
Some 24,500 apartments were sold in the second quarter of 2012 – the highest level since the first quarter of 2011 – a 9% rise compared to the previous quarter and a 12% increase compared to the same quarter last year.
The Jerusalem area recoded a sharp increase in the number of deals – 19% compared to the previous quarter and the same quarter last year, mainly thanks to the extensive marketing of new homes in Beit Shemesh.
A moderate rise was recorded in the Tel Aviv area, focusing on second-hand apartments due to an increase in investor activity. Apartment sales remained unchanged compared to the previous quarter, and even noted a 13% drop compared to the same period last year.
Relatively low prices in Beit Shemesh
Some 10,200 apartments were sold to young couples in the second quarter, a 19% increase compared to the same quarter last year. The highest rise was recorded in the Jerusalem area – 31% compared to the same period last year – mostly in Beit Shemesh.
The number of new apartments purchased by young couples in Beit Shemesh in the second quarter was 3.6 times higher than in the previous quarter, while the purchase of second-hand apartments by young couples in the city remained unchanged.
It should be noted that the prices of new apartments purchased by young couples in Beit Shemesh are relatively low. For example, the average price of a new apartment sold to a young couple in the city in the second quarter was just NIS 884,000 (about $220,230).
Another area which recorded a significant rise in home purchases by young couples in the second quarter was the Beersheba area – a 20% increase, both compared to the previous quarter and compared to the same quarter last year.
The purchase of new apartments by young couples in Beersheba recorded a 50% rise compared to the previous quarter, while the purchase of second-hand flats was up just 14%.
Like in Beit Shemesh, the prices of new apartments purchased by young couples in Beersheba are characterized by relatively low price levels as well. The average price of a new apartment bought by a young couple in Ashkelon (which belongs to the Beersheba area) stood at NIS 889,000 (about $221,500).
Prices of new apartments continued to drop in the second quarter, but by a relatively moderate rate of 0.8% compared to the previous quarter. Central Israel recorded a minor drop of 0.1% and the Jerusalem area saw a 0.6% drop.
The median price of a new apartment has dropped by an accumulated 10.9% in the past 12 years.
Foreign residents pay more
A moderate increase was recorded in the purchase of apartments for investment purposes. Some 5,500 flats were bought by investors in the second quarter – a 5.7% rise compared to the previous quarter and a 4% rise compared to the same quarter last year.
This is the first quarter, after five consecutive quarters of sharp declines, that investors' purchase level is higher than the same quarter the previous year. Investors' share in the market has stabilized at 23%.
It's safe to assume that investors' return to the real estate market in the past few months was facilitated by the decrease in the Bank of Israel's actual interest rate, after a continuous increase in its level starting from the third quarter of 2009 till the last quarter of 2011.
The average salary of those who bought an apartment for investment purposes in the second quarter of 2012 stood at NIS 17,300 (roughly $4,300 gross, per person) – about 4% higher than in the first quarter, but still 11% lower compared to the record levels in buyers' salaries recorded in the last quarter of 2010.
The share of foreign residents in the total number of deals dropped in the past three quarters from 4.8% in the third quarter of 2011 to 3.3% in the second quarter of 2012. About 36% of apartments bought by foreign residents were in Jerusalem – the highest rate since 2002.
