Purchases of apartment for investment were 15 percent higher in May 2012 than in May 2011, the first increase in 18 months, the Ministry of Finance reports in its monthly Red Lights macroeconomic survey. In October 2011, the Bank of Israel began cutting the interest rate from 3.25% to the current rate of 2.5%.

"Since November 2011, it is has been possible to see an easing of the decline in purchases of apartments for investment (although there was an increase in May). This may in part be due to the decline in the Bank of Israel interest rate," states the Ministry of Finance. "The biggest increase in investors' activity in May (compared with May last year) was in the Sharon and Coastal Plain, areas which are not usually characterized by extensive investment activity."

The number of new and second hand home sales were 17% higher in May than in May last year, and the median new home price fell 13%.

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