First quarter home prices in Israel see biggest general drop since 2007
The Central Bureau of Statistics on Monday reported figures showing a 2.9% drop in the average price of housing in Israel. Prices fell for all sizes of housing units, varying from a 1.3% decrease in the average price of apartments with 2.5 and three rooms, to a 5.8% fall in the average price of 1.5 and two-room apartments.
This is the first time that the Central Bureau of Statistics has reported a drop in prices of this magnitude, and the first time in three years that the average price of all types of housing units fell. The last time a similar decrease in prices was reported was in the fourth quarter of 2013, when nationwide prices fell by 0.4%. Going further back, the last time a general decline in prices for all sizes of housing units took place was 10 years ago, in the fourth quarter of 2007, when prices were down 4.9%.
While these figures should not be taken lightly, it should be kept in mind that they are averages affected by various biases. At the same time, as all statisticians attest, it remains to be seen whether a change in trends or temporary blip will occur.
In 2013, for example, the decline was a one-time phenomenon, and prices resumed their upward path in the subsequent quarters. This time, it is possible that this will not be the case, but the figures should be regarded with caution. The Central Bureau of Statistics figures include buyer-fixed prices. Following criticism, the bureau revised its calculation method in order to take into account the weight of discount apartments, as well as the weight of the ordinary housing units.
Nevertheless, it is difficult to isolate the groups, and to determine to what extent the discounted apartments really had an effect. At the same time, the bureau explains: “The figures for the most recent quarter are temporary,” meaning that they are not final, and are subject to revision. This is another reason to wait patiently for figures during the next quarter – in order to see how much prices fell, if at all.
While the nationwide average home price fell in the first quarter of the year, an analysis by districts shows a mixed trend, with both rises and falls. According to the figures, the most significant fall was in the Sharon district (Hod Hasharon, Herzliya, Hadera, Kfar Saba, Netanya, Ramat Hasharon, and Ra’anana), where the average home price fell from NIS 1.866 million in the fourth quarter of 2016 to NIS 1.736m. in the first quarter of 2017, a 6.9% drop. Other decreases were in the Jerusalem district (0.6%), the southern district (2.6%), and the Haifa suburbs district (0.9%). At the same time, while the nationwide average housing price was down, the average price rose in other districts: 2.8% in the central district and 2.3% in both Haifa and the area surrounding Jerusalem. Prices in Tel Aviv were unchanged.
Globes reported several months ago that housing prices in Ra’anana were showing signs of a downward trend. At the same time, some developers told Globes that housing prices had reached a dead end. As of now, however, it is hard to find a developer or contractor willing to say that housing prices for various projects are going down. The minority of projects resulting from accelerated marketing in the buyer-fixed price tenders, the rise in prices for private land and the lack of deals for it are also likely to affect prices, as well as the abundance of National Outline Plan 38 projects, in which housing prices are sometimes lower. The bottom line: the results of the next quarter must be revealed before it can be seen whether a clear trend is discernible.