Finance Ministry: Housing market cools down

By SHARON WROBEL
August 26, 2010 00:00

July home sales fall 12%, prices ease 1%, as investor activity ebbs.

2 minute read.



Arched windows highlight the home's provenance.

Emek refayim house real estate 311. (photo credit: Uriel Messa)

The housing market cooled down in July as the number of home purchases fell 12 percent and home prices declined 1%, the Finance Ministry reported Wednesday.

“There are signs of a cooling down in the housing market following a slowdown in the number of home purchases and a decline in the price of new homes in July,” the ministry said in its “Red Lights” economic survey for July.

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During July, the number of home purchases dropped 12% compared with June and 10% compared with the same month last year. Secondhand home purchases fell 18% compared with June.

Purchases of new apartments increased 11% compared with June, mainly due to more robust sales in the center of the country, while elsewhere transactions were down, the report said.

The number of new-home purchases rose 184% in the center of the country, which The Finance Ministry attributed to a large housing project for current and former members of the security forces.

Although the report did not name the project, it was referring to July’s “One & Only” sales promotion in Petah Tikva marketed by Gindi Holdings, during which 519 apartments worth a total of NIS 755 million were sold in just one day.

New-home purchases declined 25% in countrywide, the report said.

The median home price fell 1% in July compared with June.

The decline in home purchases and property prices follows the recent announcement by the Bank of Israel of a number of directives to cool down the booming real-estate market. The new regulations for mortgages, which came into effect in July, made loans more expensive for home buyers seeking a mortgage of more than 60% of the value of an apartment.

The July findings point to a continued slowdown in the rate of apartment purchases by investors from the beginning of the year in almost all areas of the country, especially in Tel Aviv and the Sharon area, following an increase since September, which had led to an increase in property prices, the report said. Apartment sales by investors in the Beersheba area rose, the report said.

Bank Hapoalim’s Mishkan Home Buyers Index for July, which monitors the financial conditions affecting home buyers, was down 0.5%.

The decrease is mainly due to the continuing increase in home prices in recent months, Bank Hapoalim said. The index has declined 19% since July 2008.

Home prices over the past 12 months rose 21.9% in nominal terms and 19% in real terms, the Central Bureau of Statistics reported.

Since mid-2007 home prices rose 48% in nominal terms and 32% in real terms.


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