The official cancellation of the zero-VAT program at the beginning of last December led first-time home buyers back to the market, according to a Ministry of Finance survey of the residential real estate industry in December 2014, published today (Sunday).
According to the survey, in December, approximately 11,300 transactions were carried out to purchase apartments in Israel, an increase of approximately 161% compared to the figure recorded in the previous month (November 2014), when a total of approximately 9,752 transactions were carried out.
According to Treasury data, the volume of transactions carried out in December 2014 is the highest since December 2013.
Alongside the increase in the total number of transactions carried out in the month under review, the data also indicates a continued increase in the purchase of apartments by first-time home buyers, which also includes young couples. Thus, the volume of purchases by this group jumped by approximately 441% in December 2014 compared to the previous month at the national level.
The Ministry of Finance also notes that the increase in the volume of apartment purchases by first-time home buyers was led by the city of Beer Sheva with an increase of no less than 150%. The Ministry of Finance also notes that the bulk of purchases by first-time home buyers focused on new apartments, which doubled compared to the previous month, while the volume of purchases by this group in the second-hand market increased at a more moderate rate of about 18%.
It is not impossible that one of the reasons for the increase in the volume of transactions by first-time home buyers and their focus on new apartments is the final cancellation of the zero VAT program at the beginning of the month, and it is also possible that there is a loss of confidence in other government programs such as target price. While zero VAT was supposed to allow buyers a benefit in purchasing new apartments in the immediate term, the target price program will only be able to do so within a year and a half at best.
Data from the Chief Economist's Department at the Ministry of Finance also shows that the significant increase in the weight of first-time home buyers is also at the expense of the weight of buyers of investment homes.
Thus, after long months in which the weight of buyers of investment apartments stood at an average of 24%, this figure fell to a low of 20.7% in December.
The Ministry of Finance notes that this is the lowest rate of buyers of investment apartments out of all apartment buyers in recent years.
According to the data, the bulk of the decline in investor purchases was recorded in Be'er Sheva. It should be noted that alongside the increase in apartment purchases by first-time home buyers, which led to a decrease in the number of investors, another factor that may have affected the number of investment home buyers among all buyers is the market's expectation of a decrease in the purchase tax on second homes, which was supposed to come into effect at the beginning of the current year but was ultimately postponed due to the elections.
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