Corona crisis has led to a fall in real estate deals: only 2,100 apartments were sold in April

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by Ifi Reporter Category:Real Estate Jun 11, 2020

The Corona crisis has led to a fall in real estate deals for the purchase of residential apartments last April that has crossed all market segments - young couples, investors, and housing enhancers - according to the chief economist's review of the housing sector in April, published Thursday.
The total number of transactions was only 2,100 apartments - the lowest level recorded in the domestic real estate market at least since the early 2000s. The last 20 years.
The review noted that the unprecedented slump in the number of transactions was recorded against the backdrop of the Corona crisis and the closure that followed until the first half of the month.
The decline was mainly focused on the new apartments, with sales down 79% compared to April last year, reaching a historic low of only 575 apartments. The contractors were also affected by the period and the decline in sales, and the contractors' cash flow in March-April was low compared to the same period last year.
The crisis also did not pass on investors, who bought only 245 apartments in April, a historic low and a sharp 76% decline compared to April last year. The Treasury notes that 42% of the transactions carried out by investors were made by public sector employees.
The young couples also purchased only 965 apartments in April, a 77% decrease compared to April last year. An interesting statistic that the Treasury points out is that a quarter of first-time home buyers are unemployed or those who were issued to the USSR following the Corona crisis. In the labor market recovery, ”the review noted.
A large proportion of first-time home buyers are a means for investors to purchase a home without paying a property tax on an investment home. Surprisingly, the economic downturn in recent months has not lowered the relative share of those in foreign currency among all first-time home buyers in April. The first one in this period is about half are single (more than twice the bachelor's share of the first apartment purchases in the routine).
These are purchases by parents who register the apartment on their children in order to save themselves a purchase tax payment since when it comes to investing an apartment, the tax increases range from 8% to 10%, while the first apartment has a tax exemption up to NIS 1.75 million (when the tax rate reaches To 8% -10% just over NIS 5.3 million). As long as the actual apartment of the parents and the income from it comes to the parents, it is in fact an illegal record, but it is a common phenomenon - the Ministry of Finance data repeatedly shows.
The total number of dwellings sold under the CPA in April was only 190 apartments, down 82% compared to April last year and the lowest level since 2016 - the first year of implementation.
Transaction declines were also recorded in the housing enhancers segment, although this is a segment with greater difficulty in delaying transactions. Housing enhancers purchased 884 apartments in April, a 71% decrease compared to April last year.
 At the same time, the Treasury reports that preliminary data for May indicates a recovery in the number of transactions compared to April, but still reflects a sharp decline compared to the period before the Corona crisis.

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