Are the government’s policies to calm the real estate market finally having an effect? According to numbers released by the Finance Ministry’s chief economist Monday, there was a significant slowdown in home purchases in October, November and December. The chief reasons for the slowdown, according to the chief economist: An increase in mortgage rates and the impending imposition of the third-apartment tax.
During October, 4,700 apartments and homes exchanged hands – an extremely low number compared to the monthly average, due to the fact that there were only 12 business days during the calendar month when the chagim fell. However sales were down in November as well; 8,900 homes exchanged hands that month, 10-percent fewer than in November 2015. Numbers were still being compiled for December, the economist said, but they appeared to be lower than the previous December as well.
That the third-apartment tax – the tax that will see the owners of more than two residences pay as much as NIS 18,000 in additional taxes – is having an effect was evident from the fact that owners of property who purchased an additional property – termed “investors” by the Treasury – slowed their activity in November, purchasing 23-percent fewer properties that month, compared to the period between January and September. December is expected to also show a significant reduction in investment purchases.
Also impacting the housing market are the recent increases in mortgage interest, with rates rising 1.5 percent in recent months. The Bank of Israel reported last week that there had been a 20-percent drop in the number of people applying for a mortgage.