Investors dominate Tel Aviv apartment purchases in November 2010
According to information released by Israel's Finance Ministry on Wednesday, 66% of the apartments purchased in Tel Aviv in November were for Investment purposes. Apartment sales for the country were up 14% in November over October, led by the strong peformance in Tel Aviv and the center of the country.
Although the sales countrywide were up 14%, the median home price fell 0.8% in November compared with October.
Sales of new apartments increased in Haifa, Beersheba and Tel Aviv, while in Jerusalem and the center of the country there was no significant change.
"In areas where sales by investors were stable or declined, such as Netanya or Jerusalem, there was no significant change in the number of transactions, including second-hand homes,” the report said. “This shows that... the supply in second-hand homes is influenced by the behavior of investors and less by people who want to upgrade their housing situation.”
On January 11th of this year, a special 2 year exemption on capital-gains tax will go in to effect, which will hopefully have the effect of increasing the supply of apartments for sale. Under current Israeli tax laws, apartment owners have to hold their property for 4 years before they can receive the exemption on capital-gains.
One of the other measures the Finance MInistry has taken in order to try to bring Israel real estate prices under control is to increase the Purchase Tax for the next 2 years on apartments purchased for Investment. Both of these measures are aimed at decreasing the portion of apartments purchased for Investment. Perhaps the new changes coming in to effect, was a big reason for the strong Investor activity in November.
January 6, 2011
