The Blue Crown Capital News: New apartment prices down

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Housing Ministry: The average price of a new home fell 8% in real terms in the second quarter.

The Ministry of Housing and Construction today published a survey for the second quarter of 2013, which indicates an 8% drop in real terms in the average price of a new apartment to NIS 1.31 million, compared with the preceding quarter. However, the average price was 1% higher compared with the corresponding quarter of 2012.
The Ministry of Housing attributed the drop in home prices, compared with the preceding quarter, to an increase in purchases of homes in the periphery, an increase in the number of purchases of small apartments, and a higher proportion of first-time homebuyers (who buy at a relatively low price).
The average price of a second-hand home was NIS 1.01 million in the second quarter, unchanged from the preceding quarter, but 8% higher than in the corresponding quarter of 2012.
The Ministry of Housing also said that changes in housing demand were expected in the coming months, hinting at a drop in demand, for several reasons: changes in capital gains tax and purchase tax; the end of assistance programs in the periphery and Jerusalem; the public's purchasing power is exhausted; and the additional credit restrictions imposed by the Bank of Israel.
The data also indicate that the average time for constructing a home has been stable in recent years, at slightly more than two years.
The amount of space under construction has reached an all-time high, but various constraints are delaying further growth. The amount of space under construction has reached 22 million square meters, of which 16 million square meters is residential space. The record amount of construction is due to the increase in the number of homes under construction and a rise in the average home size.
67,058 homes were bought in January-July 2013, of which 50,979 were second-hand homes, and 16,079 were new homes (24%). In 2011-12, new homes accounted for 22% of all home purchases. In July 2013, 10,282 homes were sold, slightly more than the 10,130 homes sold in July 2012.
The report includes disquieting data on the balance of homeowners' debt; i.e. mortgage loans, by source. The public's total housing debt rose from NIS 194.3 billion at the end of 2008 to NIS 279.4 billion at the end of June 2013. The debt rose by NIS 9.5 billion in the first half of 2013, almost all of which was in bank loans.
51,057 new mortgages were granted in January-July 2013, compared with 79,702 mortgages granted in the whole of 2012. The average mortgage rose to NIS 602,000 in January-July from NIS 589,000 in 2012, 567,000 in 2011, and NIS 554,000 in 2010.