Israeli home prices drop in global survey

Global Property Guide’s quarterly survey of house prices ranked Israel number 23 out of 36 nations on Monday, as the data showed that the global downturn accelerated.

Israeli house prices fell 0.72 percent quarter-on-quarter and 4.94% year-on-year in inflation-adjusted terms in the first quarter of 2012, in contrast with a 9.55% annualized increase in the corresponding period the previous year, the guide reported. It said the local market was hit by worldwide uncertainty and by cooling measures taken by the government and the Bank of Israel.

House prices fell in 24 of the 36 countries for which quarterly house-price statistics are available, with Portugal, Ireland, Greece and Spain – the four nations whose economic troubles have become the focus of world attention – affected most severely. Irish house prices fell 19.95% year-on-year in the first quarter, contrasting with a decline of 13.12% during the same period last year.

In nominal terms, Israel was one of 16 countries to experience house-price falls in the first quarter, with a quarter-on-quarter decrease of 0.63% and an annualized decrease of 3.21%. But unlike real-estate agents, the Global Property Guide tells its readers to take more notice of its inflation-adjusted figures, which it says gives “a more realistic picture” of house prices.

Global Property Guide (GPG) is an American website popular with residential property investors who want to buy houses or apartments in other countries. It bases its quarterly and yearly surveys on data collected from central banks and national statistical institutes. Most of the nations included in its survey are members of the OECD group of developed economies.

GPG ranked Israel in the top third for house-price increases in each of its previous surveys over the past four years. Israel was ranked No. 3 as recently as 12 months ago, behind only Brazil and Hong Kong and ahead of Norway and India (whose data are based on New Delhi prices only).

According to a survey published last week by the Israeli branch of global accounting firm Deloitte, local real-estate executives expect house prices to fall up to 20% by the end of this year. Seven percent of respondents said they expect prices to decrease 10% to 20% this year, 41% expect prices to decrease up to 10%, 37% expect the market to remain unchanged, and 15% forecast that prices would increase up to 10%.

Although a majority of executives said they expect housing prices in Tel Aviv to fall, 43% of them predicted that rental prices would rise and 44% predicted they would remain unchanged. In contrast, only 29% of respondents said they expected rental prices to rise when Deloitte published the previous version of its biannual survey.