About a quarter of the young couples who purchased an apartment in Haifa in the first quarter are residents of the center of the country, who apparently made the purchase for investment, taking advantage of the cheap prices of apartments in the city. This emerges from the Chief Economist’s survey of the Treasury in the first quarter of 2022 in the housing market.
A historical comparison shows that the total purchases of young couples in the first quarter of this year reached their highest level at least since the beginning of the previous decade, whether or not including apartments purchased as part of the price per occupant. Most of the increase was in the periphery, where there was a sharp increase of 31% compared to the corresponding quarter last year. On the other hand, in the demand areas in the center of the country, the increase is 16% compared to the first quarter of 2021.
Against the background of this phenomenon, chief economist Shira Greenberg examined the young couples and other first-time apartment buyers in the free market in the Haifa area in the first quarter of the year, where the biggest jump was made in their purchases.
“One of the most notable findings of this analysis is the relatively high rate of singles among these buyers in Haifa, with a rate of 37%, an unusual rate at the same level – singles usually center about one-fifth of first-time home buyers,” the chief economist wrote.
It also shows that unlike many other cases, these purchases were not made by straw men, who acted on behalf of investors who wanted to save themselves the high purchase tax imposed on them. The highest rate of increase in apartment prices in the past year, “the review said.
There was also an increase in Be’er Sheva
Another notable finding is that close to a quarter (23%) of young people who purchased an apartment in Haifa live in the Tel Aviv and Central Districts, with their average salary lower than that of buyers living in Haifa District, and the apartments they purchased are significantly cheaper than apartments purchased by young Haifa residents. Because a significant proportion of them do not intend to live in an apartment, but purchase an apartment where their financial capacity allows it. The fact that it is a student city increases the probability that it will find demand from tenants for these apartments. In this context, we note that in Be’er Sheva, another prominent student city, the sharpest growth rate was recorded in the purchase of a first apartment in the free market in the first quarter of this year, “the review said.
However, despite being a student and attractive city, it did not prevent Haifa from recording heavy price declines in the first decade of the current century, and the price increases in the city recorded in recent years were more moderate than in the center of the country.
In general, the chief economist found that in the first quarter of the year, which was also the first full quarter after the acquisition tax was heavier on investors (at the end of last November), the rapid growth in free market transactions (each quarter compared to the previous year) slowed since the last quarter. 2020 to the last quarter of last year. Total transactions in this quarter reached 31.2 thousand apartments.
The economist points out in her review that there is a positive correlation between the housing price index and the purchase of apartments in the periphery, and as the index rises, so does the number of buyers of apartments in the periphery who do not invest. This correlation validates the hypothesis that as prices rise, people with low incomes are more likely to purchase apartments in the periphery, presumably with the thought of insuring themselves from price increases.