Figures released by the Central Bureau of Statistics last Friday showed home prices rising at a rate not seen for more than a decade, of 19% in a year. This is despite sharp interest rate hikes by the Bank of Israel, and reports of a decline in sales and of other indicators of a cooling market.
Nevertheless, the Ministry of Finance is sure that the Central Bureau of Statistics numbers do not necessarily portray an overheated market. "The home prices index for July-August published by the Central Bureau of Statistics produced many headlines, some of them inaccurate, such as those declaring that people are continuing to snap up homes," says Galit Ben Naim, a manager in the Ministry of Finance Chief Economist Division.
"In August, the decline in the number of transactions in both new and secondhand homes continued, and even gathered pace. The total was 8,300, which represents a 41% decline in comparison with August 2021. Excluding purchases under the Buyer Price program, the number of transactions was 7,800, 38% fewer than in August last year, and 12% fewer than in the preceding month," Ben Naim says.
According to Ben Naim, in a post on her Facebook page, the sharp decline in transaction numbers did not spare the contractors, who sold 2,900 homes in August this year, 44% fewer than in the same month last year. "If these digits look familiar, perhaps it’s because the new home price index published by the Central Bureau of Statistics showed a 4.4% rise in July-August. Incidentally, sales by contractors in July-August were the lowest since the nadir recorded when the Covid-19 pandemic broke out," she writes.
"There are several possible explanations for the discrepancy between the accelerating rate of price rises, as reflected in the Central Bureau of Statistics’ index, and the decline in the transaction numbers, which has been growing steeper since April, some of them too complicated to enter into here, but this is certainly not the same market as we saw in 2021, with sharp jumps in both prices and in the number of deals."
Published by Globes, Israel business news - en.globes.co.il - on October 18, 2022.
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