Home Sales Plummet After Lapid VAT Plan

YERUSHALAYIM (Hamodia Staff) -

Predictions that Finance Minister Yair Lapid’s zero VAT plan for new homebuyers would ruin the real estate market were apparently confirmed on Wednesday with the relase of government data showing that housing sales plummeted in April 2014, Globes reported.

According to the Central Bureau of Statistics, new home sales were down 9% in April compared with March, and 19% compared with February. 1,606 new homes were sold in April, the lowest number since September 2012.

When Lapid announced the plan for VAT exemptions in mid-March, real estate industry sources said that it would freeze the market, because the promised tax breaks on new homes would cause potential homebuyers of first apartments to hold off  until the law is passed before making their purchase. Contractors and agents say that that is what has been happening.

544 new homes were sold in the Central District in April, down 11% from March, and 252 new homes were sold in the Tel Aviv District, down 37%.

However, April is usually a slow time for house sales due to Pesach, a contributing factor which makes it difficult to prove that the statistical drop is due entirely to the VAT plan.