Globes, Arik Mirowski, 16.03.2021
After a third consecutive increase at a monthly rate of 0.9% - the housing price index is rapidly moving from a state of increase to takeoff. And the most surprising thing about this issue is that against the background of the burning that has taken place in recent months in the housing market - this takeoff is not surprising.
Although the CBS mentions the annual increase in housing prices , which reaches 4.3%, this is a figure that is irrelevant to this period, which is half of the time before the first closure of the Corona and the one after it. In the eight months between May and December, the housing price index rose by Of 4.5% - a level that reflects annual increases of almost 7%, which is not seen here for about 6 years.
As stated - no one is surprised and should not be surprised by the data because the address was engraved in the tens of thousands of sales contracts signed in recent months. The amount of transactions made in the eight months from the exit from the first closure until January 2021 is not remembered in the market not only in recent years, but also in the peak years of rising house prices. An average of more than ten thousand apartments sold per month, did not exist in 2009 and 2010 either.
The market is run in a strange way
Who is the area that pulls up apartment prices on the way up? Not who you think. It is precisely the Northern District that has raised the most in apartment prices since the end of the first closure. Prices rose by no less than 5.3%; It is followed by the districts of the national capital and the economic capital of Israel - Jerusalem and Tel Aviv, whose housing price indices rose by 4.7%. Below the overall national average of 4.5% are the Central District, which recorded an increase of 4.3%, the Southern District, which raised prices by 3.3%, and the Haifa District, which recorded the lowest increase during this period, at 3%.
Is there an explanation for this strange ranking? Honestly no. Because the market is not only hot during this period, it is run in a strange way, which has not been remembered for many years, in terms of the mix of transactions carried out in it, and first and foremost the reference to the Tel Aviv area.
Already last year we discussed the phenomenon, that while the market is burning in terms of the number of transactions carried out in it - the Israeli real estate capital is frozen, and the Tel Aviv district actually recorded a severe slump .
It turns out that this trend continued in January this year and according to the Chief Economist's survey published earlier this week, the Tel Aviv district experienced a slump in transactions, the like of which experienced only in the first months of the global financial crisis, in late 2008 and early 2009. . However, as stated, the fact that there is a slump in the number of transactions does not prevent Tel Aviv from recording respectable price increases, which indicates that apartment owners are not stressed.
Another issue that stands out is the fading impact of a occupant price plan on the new housing market. Moshe Kahlon's flagship program lives today on fuel fumes of projects that receive late building permits. If several months ago, 40% and more of the new dwellings surveyed in the price range of new dwellings were price-per-tenant dwellings, in recent months they have shrunk to the order of 30%, while this index also recorded a significant increase.
The end is not in sight
We do not seem to have reached the end of the price increases of the Corona Age. On the contrary - the conditions seem ideal for further increases. The first of these is political instability. Although next week we will stand at the polls again, but even if some political decision is made - which does not seem certain at all - it is difficult to see a stable government being formed in its wake; When there is political instability - apartment prices rise.
Another factor is the interest rates on mortgages that have fallen and may even fall again, following the pressure exerted by the Bank of Israel on mortgage banks. The end of the "price per occupant" did not bring the young couples home, as might have been expected, but made them look for apartments in the free market, while taking out higher mortgages than before.
Finally, the investors who returned after lowering the purchase tax of Finance Minister Israel Katz are quickly returning to their market proportions from before the Moshe Kahlon era, which made sure to exclude them by raising taxes.