Israelis planning to buy homes hits 12-month low

“Young couples come and say that the bank is creating problems in granting a mortgage ... the red tape on the ground continues."

June 19, 2011 22:25
2 minute read.
Exterior of property sold by Re/Max vision J'lem

Exterior of property 311. (photo credit: Courtesy)

The percentage of Israelis who said that they planned to buy a home in the coming months fell to 8.6 percent in May 2011 – a 12-month low – according to the Consumer Confidence Index, compiled by Globes Research and pwc Israel.

The three-month moving average fell to 9.3%, while the number of fence-sitters rose sharply in May to 4.7% of respondents, 25% more than in April, amounting to over half of the proportion of respondents who plan to buy a home.

Be the first to know - Join our Facebook page.

However, the statistical significance of the trend is undermined when comparing respondents’ plans to buy a new home with plans to buy a second-hand home.

The proportion of respondents who plan to buy a new home rose by 12% in May, still only a fraction of respondents planning to buy either a new or second-hand home, after their numbers halved in April. The proportion of respondents who plan to buy a second-hand home fell 43% in May.

In early May, the Finance Ministry proudly asserted that there was a fall in the number of apartments bought for investment in the first quarter. However, a comparison of figures of the ministry’s Government Income Administration with figures about the willingness to buy a home indicates that the number of apartments bought for investment rose in the first quarter. The ministry attributes the drop in purchases of apartments for investment to the increase in the purchase tax. But Israelis’ plans to buy apartments, as indicated by the Consumer Confidence Index, suggest that purchases of apartments for investment will increase in the second and third quarters of this year.

Meanwhile Shikun u’Binui Real Estate CEO Tamir Dagan said at TheMarker’s capital conference Sunday that he sees greater difficulties in his firm’s sales offices.

“Young couples come and say that the bank is creating problems in granting a mortgage. In practice, belying all the declarations, the red tape on the ground continues, and it is very hard to deal with the supply.”

Mizrahi Tefahot Bank CEO Eli Yones, who was speaking on the same panel, said: “The Bank of Israel has not tried to make things difficult for young couples to buy an apartment, and there is no decline in taking mortgages from banks. With all due respect to the Bank of Israel, it is also very important to also deal with the problem of supply, because more and more young couples want to buy an apartment, which is a legitimate desire.”

He added: “There’s a mood of a bubble, and the focus of risk is in the price of land. At Mizrahi Bank, we don’t look at the ratio between an apartment price and the credit, but at the ability to repay, and when that is undermined, there is a risk of severe harm to householders and the burden of payments.

“The Israeli government’s monopoly, now that we’re talking about oligopolies and over-concentration, is the Israel Land Administration, which is riding the wave of high prices. This monopoly sets the price for the next apartment, because it is the sole supplier of land for building in Israel.”

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection


Israel Weather
  • 14 - 30
    Beer Sheva
    14 - 25
    Tel Aviv - Yafo
  • 16 - 24
    12 - 24
  • 20 - 33
    14 - 29