Exterior of property 311.
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.
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
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.”
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