inflation slowed slightly in August to minus 0.3% but housing prices continue to soar by 17.9%

While inflation slowed slightly in August and the consumer price index fell by a higher rate than expected - 0.3% - the housing market is heating up and apartment prices continue to soar. Despite the moderation in the mortgage market and the drop in the number of apartments sold, in the months of June-July, the price of apartments increased by 1.3%, thus registering an annual increase of 17.9% - the highest jump since 2010.
Data published today (Thursday) by the Central Bureau of Statistics (CBS) also shows that the annual inflation in Israel decreased slightly from a rate of 5.2% to a rate of 4.6%. This, after notable price drops were recorded in the transportation and communication items which decreased by 3.5% and clothing and footwear which decreased by -1.6%. On the other hand, noticeable price increases were recorded in the sections of apartment maintenance which increased by 2.2%, culture and entertainment which increased by 0.9% and housing which increased by 0.8%.
The situation in the housing market is very different as mentioned and much more serious. In the segmentation of apartment price changes by districts in the months of June-July compared to the months of May-June, price increases were recorded in all districts: Jerusalem (0.8%), North (1.6%), Haifa (2.1%), Center (2.3%), Tel Aviv (0.1 %) and South (1.6%). Compared to the corresponding period last year (June-July 2022, compared to June-July 2021), price increases were recorded in all districts: Central (20.9%), Haifa (18.3%), North (16.9%), Tel Aviv (16.5%), South ( 16.1%) and Jerusalem (15.7%).
In the new apartment price index, it was found that their prices increased by 1.9% in the months of June-July compared to the months of May-June, completing an increase of 18% compared to the corresponding period last year (June-July 2021). The rate of transactions that were carried out with government support and participated in the calculation is 25.6% compared to 26.8% in the previous period (May-June 2022).
The rent section without public rent increased by 0.8% last August. The CBS also noted that approximately 80% of the renters are under an existing contract, so the index for them remains almost unchanged. For 15% of the renters who renewed a contract, an increase of about 3.7% was recorded. For 5% of the renters (apartments in the sample where there was a change of tenant) There was an increase of about 5.8% in the monthly rent.
Also, the residential construction input price index increased by 0.1% in August 2022. In the last 12 months (August 2022 vs. August 2021), the residential construction input price index increased by 6.3%.
Even the high interest rate hikes carried out by the Bank of Israel since April do not curb the rise in apartment prices and it seems that in this area only a comprehensive economic plan that increases the supply of apartments will bring about a halt to the price increases. The public does not believe that apartment prices will drop soon, so the buyers are ready to pay even higher prices before more apartment prices rise across the country.