Real Estate Transactions in June Hit 20-Year Low, but New Apartment Sales Increase
By [Author Name]
August 14, 2023 | 19:43
In a report published today by the Chief Economist, it was revealed that real estate transactions in June experienced a significant annual decrease of 32%. This marks the lowest number of transactions in the month of June in the past 20 years. The Central Bureau of Statistics also released data this morning, confirming that only approximately 7,100 apartments were sold during the month, with 2,850 of them being new apartments.
While the overall number of transactions decreased, there was an 8% increase in new apartment sales in June. This upward trend began in April following a year of continuous decreases in transaction numbers.
The report also highlighted that 60% of the apartments sold in June were “on paper,” meaning the delivery date for these apartments will occur in the future. This is a significant improvement compared to March when the proportion of such apartments reached a record high of 71%. The economist noted that although this indicates positive market progress, the first data for July suggests that the trend of delayed transactions may continue. As of June, there were approximately 58,710 new apartments remaining for sale, with an estimated time of 22.5 months to sell them all.
Gili Ben Naim, a real estate surveyor at the economist’s office, stated that the performance of real estate transactions is closely linked to mortgage activity. In July, mortgage performance showed a 37% decrease compared to the previous year, remaining at a similar level to the preceding month. Furthermore, real estate tax collection data for July indicated a significant 49% decrease compared to the same month last year.
Investors played a role in offsetting the number of sales from the number of purchases in July, resulting in a decrease of approximately 300 apartments for rent. This was achieved through the intensive sale of second-hand apartments. The total number of registered second-hand transactions for the month was 4,250 apartments, marking an annual decrease of 39% in transaction numbers.
The economist explained that the rental market has been in a continuous deficit since February 2022, with about 300 apartments being taken off the market every month. The primary cause of this trend seems to be the increase in interest rates, which has negatively impacted potential buyers.
On another note, at the end of the month, the grant raffle for young couples purchasing a second apartment, led by Housing Minister Yitzhak Goldknopf, will begin. Approximately 2,000 young couples will have the opportunity to receive a grant of NIS 50,000 if they purchase an apartment priced between NIS 300,000 and 600,000. In July, around 1,415 apartments were sold within this price range, all of which were located in the periphery. However, this market segment also experienced a weak performance, with a 40% decrease compared to the first half of last year.
The real estate market in June faced several challenges, with a significant drop in overall transactions. However, the increase in new apartment sales and the upcoming grant raffle for young couples may contribute to the recovery and growth of the market in the coming months.
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