Apartment in Tel Aviv 311.
(photo credit: Courtesy)
The extent to which we should believe this week’s contradictory housing figures
released by the Central Bureau of Statistics and the Government Assessor is
debatable. Both reports are based on data from the Israel Tax Authority’s
real-estate-prices database, which relies on reports by home sellers. However,
the recently published State Revenue Administration’s report for 2009-10
provides more than just a glimpse at the problems of this database.
State Revenue Administration examined homes sold in 2002 and resold 2009, so it
is reasonable to assume that the apartment size, number of rooms, floor in the
building and its location remained constant. It found inconsistencies in 77
percent of the reports on apartment size between the two transactions; in 62% of
the cases the discrepancy was at least 10 square meters.
discrepancies about the number of rooms in 31% of the reports – a fact that
affects the nice tables (based on the number of rooms) in the statistics
bureau’s housing figures. The apartment’s floor changed in 26% of the reports,
and the number of floors in the building differed in 76%.
It is scary
enough to think that these data are what the Central Bureau of Statistics and
the Government Assessor use to calculate the average apartment price to an
accuracy of a few thousand shekels.
But what is the alternative? The
Finance Ministry has told us every month for the past 18 months that home prices
have been falling – by comparing only new apartments sold from one month to the
next in the same project.
The problem – beyond the fact that we all see
how much these figures are divorced from reality – is that the Tax Authority
reports that 4,748 new homes were sold in the second quarter of 2011, or just
22% of all realestate transactions.
Moreover, presumably the number of
residential projects that can be used for comparative purposes for monthly sales
are few in number, further reducing the already meager and dubious database on
which the Finance Ministry relies.
The result is the repetition of a
well-known scenario: Not only does no one know were we are going, no one even
knows where we have been – a rather significant point considering the
government’s wish (or lack thereof) to change direction.
On Monday, the
Central Bureau of Statistics reported that the average apartment price had
fallen by 2.2% in the second quarter from the preceding quarter. That was mostly
due to a 3% drop in prices for large apartments, which was partly offset by
higher prices for small apartments.
The average price for the
middle-market 3.5- to four-room apartment edged down 0.8% to NIS 1.18
The day before, the Government Assessor announced that home
prices had actually risen by 1.6% in the second quarter. The figure is based on
just 4,500 sales of fourroom apartments in 16 cities nationwide.
up, we are left with the trends and intuitions on the ground. A brief stroll
among sales offices or the tent protests is enough to see that the market is
frozen, and buyers again have the upper hand over sellers.
however, it is advisable to remember that we saw this movie two and a half years
ago. Unless we exploit the opportunity to implement at least some of the
solutions that have been suggested over the past six months – real solutions to
boost the supply of land and apartments – we are liable once again to squander
the calm before the storm hits again.