Is the Israel Real Estate Market finally cooling off?
After a few years now of ever increasing real estate prices, could the real estate market in Israel actually be leveling off? Information coming out from a variety of sources this month seems to indicate that the market may be entering a "flattening" period in terms of price and purchase activity.
A couple of trends that were reported on this month, give some validity to the premise that the real estate market may be entering a period of "sanity". The first trend is that of "apartments purchased for investment". The Ministry of Finance reported earlier this month that apartments purchased for investment fell to 25.8% of all home purchases for the first quarter of 2011. This is the lowest proportion since 2004. At the peak of Israel's recent home price escalation, apartments purchased for investment accounted for 35% of all home purchases. The Israeli government's step of increasing the Purchase Tax on apartments purchased for investment, along with recent interest rate increases by the Bank of Israel, appear to be taking effect.
The other trend that will contribute to the possibility of a cooling off of the market is the number of housing starts. The Central Bureau of Statistics reported earlier this month that housing starts were up 16% in the first quarter of 2011 over the corresponding quarter of 2010. There were 11,270 housing starts in the 1st Quarter of this year, this kind of activity has not been seen since the 3rd quarter of 2000.
It has been reported that demand for apartments in April was down, but one month does not a trend make so we will see over the next couple of months where things are headed.
Source: Globes online
June 11, 2011
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