The new homes market has reverted to the level it was at three years ago. In the third quarter of this year, sales of new homes fell by 25% in comparison with the previous quarter, and by 40% in comparison with the third quarter of 2021, according to figures released by the Central Bureau of Statistics. Jerusalem led new home sales in the third quarter of this year, with 631 sales.
The rise in interest rates, and the exit from the housing market by investors since Minister of Finance Avigdor Liberman raised purchase tax on investment homes a year ago, have left their mark. Fewer people can afford to take on a mortgage loan and meet the high prices of homes, and investors, for whom the minimum rate of purchase tax has risen from 5% to 8% on each deal, are making the calculation that the return of almost the first three years of holding a housing unit will be paid in purchase tax, and are abandoning the market.
Mortgage lending decline continues
Mortgage lending declined in October for the fifth successive month, something that has not happened for at least eleven years.
Since November 2021, when new home sales hit an all-time high (over 7,000), the market has experienced a steep decline. According to the Central Bureau of Statistics, within a year, the rate of sales has regressed to the level of mid-2019.
The average time taken to sell a new home has also gone back to 2019 levels. It now takes 16.6 months on average to sell a new home, double the time it took in the third quarter of last year, indicating growing difficulty on the part of developers in selling new units.
At the end of September, the stock of unsold housing units reached 48,600, which is a high figure, resulting from extensive construction and thin sales.
As mentioned, Jerusalem led sales of new homes in the third quarter with 631 sales, a third more than in the previous quarter. 405 new homes were sold in Netanya, 402 in Tel Aviv, and 348 in Kiryat Gat.
Published by Globes, Israel business news – en.globes.co.il – on November 14, 2022.
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