Sales of new apartments dropped in September for a third consecutive month as the supply shortage deepens and prices continue to rise steeply, according to figures published by the Central Bureau of Statistics on Thursday.
"Following the sale of 2,050 new apartments in June this year, sales declined in each month to September," the statistics bureau said.
In September, 1,290 new apartments were sold, out of which 970 were sold by private contractors and 280 by public contractors.
Sales of new apartments rose by 8% in the January-September period compared with the same period last year, mainly due to strong sales registered during May and June.
Forty-four percent of the new apartments were sold in the center of the country and 18% in the Tel Aviv area in the January-September period.
Sales of new apartments dropped by 14.8% in the Tel Aviv area and by 40% in Judea and Samaria compared with the same period last year, while sales rose by 33.6% in the Haifa area, by 28.5% in Jerusalem and by 25% in the center of the country.
The statistics bureau also reported that apartment prices on average rose 13.3% in the 12 months up to and including August and by 27% since mid-2007.
"There are a number of factors in the supply and demand side explaining the fall in sales," Shlomo Maoz, chief economist at Excellence Nessuah Investment House, told The Jerusalem Post Thursday. "On the one hand, people are deterred by rising apartment prices and understand that property prices cannot continue to rise forever. Everyone knows that at some point every bubble bursts. In addition, the economic crisis has this time put many hi-tech workers out of their jobs, many of whom were buying property before.
"On the other hand, expectations are that interest rates will start to rise, making mortgages more expensive."
The supply of housing plunged to a low point as the number of new apartments for sale in private construction fell by 27% nationwide to 7,650 at the end of September, the bureau reported. In 2005, the number of new privately build apartments for sale was 13,155. The supply of new apartments in private construction up for sale has continued to drop since November 2008 after a short period of growth in the May-October period last year.
"Taking into account the trend rate of sales of new apartments in private construction in September this year and no other changes, in six months time... all new apartments left nationwide will be sold," the bureau said in its report. "Broken down by areas, the supply of new apartments is set to last 24 months in Jerusalem, 11 months in Tel Aviv, seven months in Haifa and five months in the Center."
Speaking at a real-estate conference last week, Construction and Housing Minister Arial Attias said price increases in the property market were the result of a shortage of housing units on the market. He said many more land tenders would be offered to flood the market with thousands of residential units.
"Young couples should not believe the headlines claiming that housing prices will only go up," Attias said. "It will take time, but they will start to fall in 2010."
"We need to influence the price of apartments from the supply side," he said. "Thousands more residential units can be put on the market. We will put 6,000 apartments on sale in November - 2,000 of these in areas of high demand. Thousands more will go on the market by the end of the year, in addition to the November tenders. All of this is with one aim in mind: to lower the price of housing."
In a report published at the beginning of the month, the Bank of Israel said it expects the steep rate of increase in property prices over the past two years to moderate to a certain extent over the course of 2010 as interest rates start to rise and unemployment continues to grow.