Demand for apartments down 12%
Is housing market experiencing freeze again? Drop in demand recorded in almost all districts in Israel, while construction pace slows down
A total of 2,050 new apartments were sold in the first month of 2012 (up 17.6% compared to January 2012), while 1,140 apartments which were not put up for sale were delivered to their tenants (a 50.4% drop compared to January 2012).
Apartments that are not put up for sale are built by their owners for private purposes (whether independently or through a purchase group) or for rent purposes.
The drop in demand for apartments was recorded in almost all districts in Israel, especially in the central district (a 36% decline) and in the Jerusalem district (31%). The Haifa district, on the other hand, recorded a 36% increase in demand.
Surprising figures
These figures are particularly surprising in light of the consistent rise in demand for apartments in Israel in the past years. In the previous decade, the pace of apartment sales stood at an average of some 2,600 flats per month. Since then, this figure has climbed to a level of 3,500 apartments per month on average in late 2010 and early 2011.
A downward trend began in the summer of 2011, following the social protest. Since the summer of 2012, the demand has stabilized with an average of some 3,300 apartments sold per month.
The CBS attributes the current decline in apartment sales to the fact that the number of apartments in independent construction and construction for rent delivered to their owners in January 2012 was unusually high. In other words, looking at the current figures it's difficult to say whether there is a new trend in consumers' willingness to buy apartments.
In addition, the slowdown in construction increased recently, with a 20% drop in building starts. This trend is beginning to leave its mark on the housing market, as despite the drop in demand the number of apartments left "on the shelf" has gone down by 7.4%, standing at 20,290 apartments.
The ongoing increase in the number of available flats for sale in Israel, which lasted from December 2009 to July 2012, has thus been interrupted.
