Home prices rose 0.8% in August

The Central Bureau of Statistics data defy other figures, which point to a cooling of the real estate market.

By ADI BEN-ISRAEL/GLOBES
October 16, 2011 22:39
2 minute read.
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Home prices rose 0.8 percent in August 2011, the fastest growth rate since April, the Central Bureau of Statistics reported Sunday, after rising 0.7% in July and 0.4% in June.

Home prices rose 7.3% in January-August 2011, compared with a 10% rise in the corresponding months of 2010 and 11.1% in the corresponding months of 2009.

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Home prices rose 12% in the 12 months through August, and by 67% since May 2007.

Home prices have risen for 32 consecutive months since December 2008, the last month in which they fell.

The Central Bureau of Statistics data defy other figures, which point to a cooling of the real estate market. The Finance Ministry persists in asserting a drop in home prices and in the number of sales. The Globes-Homeless classified ads site review points to a slight drop in home prices.

The Central Bureau of Statistics says that demand for housing and new home sales have fallen lately, paralleling an increase in housing starts and inventory, leading analysts to believe that home price will fall in the future.

In the minutes of the interest rate decision for October, the Bank of Israel states, “Activity in the construction industry continues to be strong. The number of starts in the twelve months to June reached 42,757 and the number of completions was 33,613, figures which were very similar to the levels of the previous month. The number of new homes sold fell, and in May-July was 9.6% lower than in February-April.



“The stock of new homes available for sale continued to increase, and in May-July was on average 6.4% higher than the three preceding months.

Home prices, which are presented in the Central Bureau of Statistics survey of home prices but are not included in the CPI, increased at a monthly rate of 0.4% in June-July, after rising 0.2% in May-June (an estimate that was revised down this month).

“The annual rate of increase in home prices is maintaining stability: in the twelve months ended in JuneJuly home prices increased by 12.3%; compared with a 12.1% increase in the MayJune figure. The slowdown in the rate of increase in home prices was affected by increases in the interest rate, measures introduced by the Bank of Israel affecting mortgages, and steps taken by the Finance Ministry in real estate taxation, together with the continued increase in the number of building starts.”

The Bank of Israel added, however, that the housing price index of the CPI, which is mainly based on renewed rental contracts, rose by a further 1.3% in July and 5.2% over the preceding 12 months.

Home prices were excluded from the CPI in 1999.

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