CBS: Home Prices Post 10% 12-Month Rise

YERUSHALAYIM -
A construction site of residential buildings in central Israel. (Flash90)

Housing prices in Israel rose by 10.3% over the 12 months to the end of October, according to figures released by the Central Bureau of Statistics on Wednesday. This is the biggest 12-month rise since 2010. Prices in deals in September-October were 0.9% higher than in August-September this year. One likely cause of the continued rise in prices is the hike in purchase tax, which led to a surge in demand as buyers rushed to beat the tax rise.

The Consumer Price Index (CPI) fell by 0.1% in November. The consensus analysts’ estimate published by Bloomberg was that the index would be unchanged. The rate of inflation in the 12 months to the end of November was 2.4%.

There were prominent falls in November in the fresh produce sector, which fell 5.8%, the culture and entertainment sector, which fell 1.6%, and clothing and footwear, which fell 0.8%. Furniture and household equipment prices rose 2.4% last month.

Meanwhile, more than 14,000 housing units were purchased in Israel over the course of October, the highest monthly number since June 2015, when over 16,000 units were bought, and an 87% increase compared to October 2020, according to a report this week by the Finance Ministry’s Chief Economist Office.

Over a third of these units (about 4,800) were bought by investors — those who already own one or more dwellings — an increase of 236% compared to the same period last year and also the highest since 2015, the report said.

A quarter of the housing purchases by these investors, or about 1,200, were made on the last day of October when plans to restore a purchase tax of 8% for second-home buyers were announced. The purchase tax, which went into effect on Nov. 28, had been reduced to 5% in 2020 in an effort to get investors back into the real estate market amid the economic slowdown brought on by the COVID-19 pandemic, boost the construction sector, and increase tax revenues. Experts correctly predicted that higher housing prices would follow.

First-time buyers purchased over 5,000 housing units in October, an increase of 47% compared to last year, the Finance Ministry said. According to the Bank of Israel, over NIS 11 billion ($3.54 billion) in mortgage loans were granted in October, up from about NIS 7 billion ($2.25 billion) in September but lower than the over NIS 12 billion ($3.86 billion) seen in June, July and August this year.