Minister of Finance chief economist Yoel Naveh published the results of an August real estate survey showing that there has been a decline in the real estate market observed in Jerusalem and Tel Aviv areas. On the other hand, while investment in luxury apartments cooled off in northern Israel, purchases of apartments coursed in.
According to Globes, purchases of first apartments fell by a modest 4 percent in August. More specifically, Jerusalem was found out to have observed a 14 percent plunge in purchases. The same is true in the city in the month of July. Concurrently, the average prices of apartments purchased by young couples in Jerusalem became 10 percent lower.
These trends are said to have occurred just prior to the recent terrorist attacks that took place mostly in Jerusalem areas. But according to Naveh, the decrease in prices are due to the proportionate rise in the transactions in this region involving housing in communities with relatively low prices. And the decrease in purchases by young couples in the Jerusalem area was partially counter balanced by a steep increase in purchases in this market sector in the remote northern districts.
Moreover, Naveh views the increase in purchase tax to 8 percent for foreign investors as the reason for the sharp decrease the percentage of new apartments over purchased by investors and the proportion luxury apartments versus new apartments purchased specifically. An example of which, according to Globes, is that new apartments in August has fallen to 20 percent of all apartments purchased by investors, whereas it was 35 percent in the first five months of 2015.
Outside the drop in the rate of deals in areas that are comparatively pricey, the investors segment of the market also presented a drop in the price levels of the apartments at the district levels itself. As an example, Naveh cited the Sharon district which led the decrease in investor purchase in August at 16 percent even if the purchases of luxury apartments was up by 3 percent. Sharon district was previously known as the most dominant with respect to investment activity since mid-2014.
According to Naveh, Sharon district is the only area where ratio of purchases by investors continue to drop from July's steep plunge.
