Tel Aviv apt bldg.
(photo credit: Daniel Cherrin)
The number of transactions in the housing market rose 14 percent in November
compared with October, driven by sales of investment apartments in Tel Aviv and
the center of the country, the Finance Ministry reported Wednesday.
surge in the number of housing transactions was due to a sharp increase in the
sales of second-hand apartments in the Tel Aviv area and center of the country,
where sales by investors rose,” the Finance Ministry said in its “Red Lights”
economic survey for November.
“In areas where sales by investors were
stable or declined, such as Netanya or Jerusalem, there was no significant
change in the number of transactions, including second-hand homes,” the report
said. “This shows that... the supply in second-hand homes is influenced by the
behavior of investors and less by people who want to upgrade their housing
In November, the number of home transactions rose 14%
compared with October and 10% compared with November 2009. Sales of new
apartments increased in Haifa, Beersheba and Tel Aviv, while in Jerusalem and
the center of the country there was no significant change.
percent of new apartments purchased in the Tel Aviv area were a second, or
Fifty-three percent of the apartments sold by
investors were bought for residential purposes, the report said.
median home price fell 0.8% in November compared with October.
prices dropped 2% in the Jerusalem area and 1.8% in the Tel Aviv area. Prices
rose 1.3% in the Haifa area and 0.3% in Rehovot.
The Finance Ministry
attributed the decline in property prices to directives issued by the Bank of
Israel last year to cool down the real-estate market.
New regulations for
mortgages that came into effect in July made loans more expensive for home
buyers seeking a mortgage of over 60% of the value of an
Thirty-six percent of investors who sold apartments last year
had sold at least one additional apartment over the past six years, indicating
that they had waited until they could sell without having to pay capital-gains
tax, the report said. Currently, owners who want to sell need to wait four years
to be exempted from the capital- gains tax.
“For these investors, the
special exemption on the capital-gains tax, which comes into effect from January
11, will be effective,” the Finance Ministry said.
In recent years, the
number of apartments purchased for investment purposes increased sharply,
representing 30% of all housing transactions in 2009. That contributed to a
surge in real-estate prices, making it harder for first-time home buyers and
young couples to find affordable housing.
In an effort to encourage the
sale of apartments and boost supply, the Finance Ministry decided to cancel the
capital-gains tax for sellers of a second and third investment apartment for a
period of two years.
In addition, it is raising the purchase tax on
For the next two years, the tax will be 5%, up
from 3.5%; 6% on apartments worth NIS 1 million to NIS 3m., up from 5%; and 7%
from those worth more than NIS 3m.