According to Central Bureau of Statistics figures for July, the number of new homes being purchased in Israel is falling steeply. 2,800 new homes were bought in July, the lowest monthly number since October 2019, not counting March-May 2020, when Israel was under lockdown.
New home purchase are declining at a monthly rate of 4%, and the decline began in August 2021, a long time before interest rates began to rise.
Mortgages start to decline
Why the Israeli housing story could be exceptional
There has not been such a steep decline in new home purchases since 2007. The question is, why is it happening?
One cause is of course the rapid rise in interest rates, which takes buyers out of the market. As mentioned, however, interest rates started rising only in the past few months, whereas the decline in new home transactions started in the third quarter of last year.
Interest rates are therefore just one contributing cause of a situation that has several other basic causes: the low supply of new homes in high-demand areas; the conclusion of most of the deals in the first generation of the subsidized Buyer Price program from the lotteries held in 2018-2019; high prices, which mean that many people cannot afford to buy in the free market; and the disappearance of investment buyers after the hike in the tax on investment purchases.
The highest number of new homes purchased in the May-July period was in Netanya, with 597 transactions, followed by Tel Aviv (590), Jerusalem (575), Ashkelon (471), and Lod (367).
Published by Globes, Israel business news – en.globes.co.il – on September 14, 2022.
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