Young couples led housing recovery in Q2

Young couples led the Israeli housing market’s recovery in the second quarter, with Beit Shemesh proving especially popular, the Treasury reported Tuesday.

Some 10,200 homes were purchased by young couples in April through June, a 19 percent increase on the corresponding period last year. This was the first time in five quarters that the Treasury reported a year-on-year increase in that category.

Total housing sales reached 24,500 in the second quarter, a 12% increase from the corresponding period last year and a 9% increase from the first quarter.

The greater Jerusalem area recorded a 19% annualized increase in home sales, the Treasury said. Most of this activity was concentrated around Beit Shemesh, which is defined as part of Jerusalem for land taxation purposes, and not in the capital itself. Only a small increase in transactions was recorded in Tel Aviv, and these were mostly made for investment purposes.

For the first time since 2009, there were two consecutive quarterly increases in the purchase of investment apartments.

The rise was caused mainly by transactions involving first-time investors, the Treasury said, although it forecast that multi-property investors will resume activity next year after the expected loosening of conditions for obtaining capital-gains tax exemptions.

The fall in housing starts, combined with strong labor-market data and the low real interest rate, suggest a likely continuation, or even strengthening, of the rise in home prices, according to Ofer Klein, head of Harel Finance’s economics and research division.

Writing in his weekly macroeconomic report, Klein pointed out that sales of new privately built homes fell by 2% in July but rose by 14% in the past year, while the number of new homes for sale fell by 3% in July but rose by 16% in the past year. He said trends indicate that new-home sales have been rising in the past few months, but that growth in housing supply has slowed.