Q2 data points to rising home prices across country

Prices rise in 11 of 16 cities surveyed, climbing 6% in Tel Aviv, 2% in Jerusalem; prices fall by 3% in Herzliya.

By NADAV SHEMER
August 12, 2012 16:34
2 minute read.
Tel Aviv apartment

Tel Aviv apartment 311. (photo credit: Courtesy)

The average price for a fourroom apartment increased by 1.9 percent in the second quarter, the Justice Ministry’s Real Estate Appraisal Department said Sunday.

Prices rose in 11 of the 16 cities surveyed, climbing 6% to an average NIS 2.44 million in Tel Aviv, 5% in Modi’in and Eilat, and 2% in Jerusalem and Beersheba.

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They were unchanged in Petach Tikva, Rishon Lezion, Ashdod and Ramle, and fell by 3% in Herzliya.

However, prices rose by just 1% compared to the corresponding period in 2011.

Global economic instability, government and Bank of Israel measures and declarations, as well as protests over the cost of living, all affected the housing market in the past year, according to Real Estate Appraiser Tal Alderoti.

“Inelastic demand that accumulated during the past year began to free up in the second quarter. This was partly due to government decisions on the Trajtenberg Report’s housing chapter late in the preceding quarter, which reduced uncertainty,” Alderoti said.

The Treasury released data Sunday which seemingly contradicted the appraisal department’s findings. Home prices actually fell 0.6% in June following a similar decrease in May, according to its monthly report on the economy, marked by decreases of 2% in Jerusalem and 1.1% in central Israel (excluding Tel Aviv).

Real Estate transactions rose by an unusually large amount in June, the Treasury report said, increasing an annualized 15% across the country and 30% in central Israel (excluding Tel Aviv), but only 7% in Tel Aviv.

There was a 52% year-on-year increase in housing purchases made by young couples.

The Treasury report was negative overall, pointing to a widening trade deficit and worsening manufacturer sentiment, in addition to rising unemployment and falling workforce participation.

Exports fell 11.9% in dollar terms in June (excluding ships, planes and diamonds), while imports dropped 4.3%, the report said. The trade deficit would have widened even further if not for a substantial increase in purchases of start-ups by foreign investors, which appear in the data under exportation of services.

Last week, the Israel Export Institute (IEI) warned that local manufacturers might have no choice but to move their operations abroad if the government does not step in with a solution. Exports dropped 7.5% in the second quarter to $11.2 billion, due mainly to a 14% decrease in sales to the European Union, according to the IEI.

Unemployment rose to 7.2% in June from 7.1% the previous month, while workforce participation fell to 63.5% from 63.3%, the Treasury report said.

In a bad sign for the future unemployment rate, the Purchasing Managers’ Index decreased for the sixth time in eight months, indicating an expected contraction in industrial activity.


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