New home purchase stats indicate buying frenzy may be abating

Are we seeing the first signs of the wave of new home purchases subsiding? Figures from the Central Bureau of Statistics on new home purchases released today show a decline in the number of transactions for the fourth successive month. Moreover, for the first time in two years the time spent on the shelf by a new apartment has lengthened.

The figures are not final, and the number of new home purchase is still very high, while the time it takes to sell one is still fairly short, but there does appear to be a change in trend.

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4,381 new homes were sold in Israel in March. This represents the fourth successive month in which the number has fallen, after the peak of 6,163 new home purchases in November 2021. At the same time, the average number of months a new home waits for sale has risen to 9.9. Between January 2020 and September 2021 that statistic fell from 15.2 months to 9 months, remaining steady at that level until last December, when it started to rise again.

It is highly likely that the change in both measures, apartments sold and time taken to sell them, stems from investment buyers quitting the new homes market after the rate of purchase tax on investment purchases was raised last November.

At any rate, as a result of the decline in investment purchases, the number of new homes sold in the first quarter of this year was 12% below the number for the first quarter of 2021.

Tel Aviv continues to lead the table for number of homes sold, with 961 transactions in the first quarter, but that is 14% below the figure for the first quarter of 2021. Ashkelon, which was second in the table in the first quarter of 2021, falls to fourth place, after a 16% decline in new home purchases to 739. In Jerusalem, the number fell 8% to 739. Rishon LeZion, on the other hand, where the number of new homes sold jumped 80% in the first quarter of this year in comparison with the first quarter of 2021, rose to the number two spot.

Published by Globes, Israel business news – en.globes.co.il – on May 12, 2022.

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