At the end of September, it was officially decided that only the Central Bureau of Statistics would be authorized to publish figures on Israel's housing market. This controversial decision was supposed to finally bring some kind of certainty. There were those who claimed that after the Governor Assessor was banned from publishing his survey and the Central Bureau of Statistics became the only source of information, the figures would become biased. There were concerns that Buyer Fixed Price projects would be added to the statistics and that the data will immediately start indicating that prices had dropped.
And yet, the most recent Central Bureau of Statistics review has surprised everyone. Not only has it not fallen in line with Ministry of Finance figures as some feared, it has suddenly indicated a significant rise of over 1% in home prices.
Real estate is a world of buyers and sellers; it is influenced, more than anything, by expectations. Any major headline on a decline in prices can lead to a crash while headlines on continuing price rises may frustrate those who waited for prices to drop and result in another wave of desperate buyers.
Nevertheless, if we have learned anything from the 2011 social protest, it is the importance of being more critical about data. Regardless of headlines on price rises everyone should check the data themselves and try and figure out what is really going on.
No one knows what will happen tomorrow or in another month, but at present the real estate sector is certainly in a delicate situation. The developers' sales offices are not exactly brimming with buyers, the volume of transactions is declining, while investors also feel that something is happening. Only a few days ago, a Ministry of Finance survey indicated that foreign home buyers were becoming fewer. But changes in the real estate sector take time and only analyzing trends over several months can reveal what is actually happening.
So, what do the figures say if you examine them thoroughly? Well, it depends on what you examine.
If you are looking at the home price index, the most recent figure does indicate that prices rose 1.3% in August-September from July-August - a significant rise that is without precedent in the past few months. But looking at this figure closely will show that it marked with an asterisk, which links to a Central Bureau of Statistics explanation: this is a tentative figure that will continue being updated. And the figures really are updated. Remember the celebrations at the Ministry of Finance a few months ago, when a decline was recorded in this same index? This decline disappeared after an update.
But wait a moment, do not despair. If you look at another Central Bureau of Statistics figure, which refers to the average home price in a quarter, the picture is entirely different. The average home price in each quarter is presented alongside the home price index. At present, the most recent quarter is the third quarter of 2016 - July, August and September. If you look at this table, which is based on transactions in dozens of cities and villages, the bottom line is the exact reverse. According to this table, home prices in Israel in the third quarter actually dropped 1.7% from the previous quarter. In this comparison, average prices in Tel Aviv, Haifa and Hasharon districts also dropped. The average price, on a national level, in the third quarter was also slightly lower than the average price in the first quarter.
When discussing averages and statistics, every number is relevant, and the key question remains what you choose to examine. The bottom line is that the most important thing is to try and see the entire picture.
Although the Central Bureau of Statistics website is not very clear or friendly, it could be worthwhile for anyone who wishes to see all of the data to visit it himself or herself. All of the figures are there. Are prices rising or falling? This is something we will have to analyze over months. In the meanwhile, the changes remain unclear. What is certain is that one index can be as confusing as several different indexes. Now, the greatest hope is that the decision on improving the data on the Central Bureau of Statistics website will make figures clearer to the general public, which will then be able to see the full picture itself.
Published by Globes [online], Israel business news - www.globes-online.com - on November 20, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016