January-March: 31,000 apartments were purchased in the free market - 39% increase

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by Ifi Reporter Category:Real Estate Aug 17, 2021

According to data from the Chief Economist at the Ministry of Finance, Shira Greenberg, in January-March this year, about 31,000 apartments were purchased in the free market - the highest level since the record set in the second quarter of 2015, which overshadowed investors' pre-acquisition purchases.
This is a 39% increase compared to the first quarter last year, which was partly overshadowed by the outbreak of the corona plague. Compared to the corresponding quarter in 2019, this is an increase of 29%. Compared to the last quarter of 2020, this is a more moderate increase of 8%. This continues the rapid recovery in the number of transactions, after the low level in the second quarter last year, with the outbreak of the plague. The increase in the number of transactions was reflected in all areas of the country except for a decrease of 1% in the Hadera area. The Ministry of Finance claims that contrary to claims that following the corona there has been a change in preferences in favor of buying an apartment in the periphery over areas of demand, no basis has been found for this.
Data from the Ministry of Finance also show that the average price of an apartment purchased in the free market in the first quarter of this year was NIS 1.8 million, with significant price differences of NIS 1 million between the central and peripheral areas. Thus, while the average price for an apartment in the center of the country was NIS 2.3 million, in the periphery the average price was NIS 1.3 million. When comparing the price differences between the center and the periphery between the first quarter of this year and the corresponding period last year, it was found that these gaps were slightly reduced - only in second-hand apartments.

The average price of a new apartment purchased in the free market in the center of the country, both in the first quarter of this year and at the same time last year, was 75% higher than the average price of a new apartment purchased in the free market in the periphery in those quarters. On the other hand, in transactions in second-hand apartments, the price differences between the center and the periphery were reduced. The explanation for this is that investors in the market segment of second-hand apartments in the center bought less "quality" apartments and therefore cheaper than those purchased in the first quarter last year.
Including "price per occupant" sales (ie state-subsidized apartments), the total number of transactions in the first quarter of the year was 34,000 - also the highest level since the second quarter of 2015. Compared to the corresponding quarter last year, this is a 34% increase in the number of transactions. Compared to the first quarter of 2019, this is an increase of 24% and compared to the last quarter of 2020, there was a 6% increase in total transactions.
The jump in transactions was led by real estate investors, with a jump of 85% compared to the corresponding quarter in 2019. These total purchases in the first quarter stood at 6,800 apartments - also the highest level since the record recorded in the second quarter of 2015. Performed in the period under review, the weight of investors in the first quarter of this year was 19.9% ​​- an increase of 6.6 percentage points compared to the first quarter of 2019.
Minister for sales by investors, the data show that in the first quarter of this year they sold 6,600 apartments - an increase of 24% compared to the corresponding quarter in 2019 and the highest level since the first quarter of 2017. In the peripheral cities there was a decrease in property holdings. At a relatively high rate of apartments sold at a loss. On the other hand, the Sharon localities stood out with low, to zero, rates of loss-making sales. Sales encompassed all areas: In the demand areas in the center, there was a significant increase in investor sales, but in Tel Aviv there was a decline.
The sharp increase in investor sales in the first quarter was fully offset by an even sharper increase in the number of apartments purchased by investors. As a result, investors' inventory of apartments returned to the market during the quarter, albeit on a relatively small scale (less than 200 apartments). In the last quarter of last year, for the first time in 5 years, there was an increase in the inventory of apartments by investors, after a continuous decline since April 2016, during which about 27,000 apartments were deducted from this inventory.
The purchases of young couples in the free market in the first quarter broke records. The area that led the increase in young couples' purchases in the free market in the first quarter of this year was the Netanya area, with a 38% increase compared to the first quarter of 2019 - the highest level recorded in first free market purchases in this area at least since the beginning of the previous decade. The average household wage of these buyers was NIS 23,800 gross per month and the median wage was NIS 16,100. Compared to buyers of the first apartment in the free market in this area in January last year, before the corona, it was found that wage levels climbed, when in fact the prices of the apartments purchased were slightly lower. 
 

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