Tel Aviv, Jerusalem housing prices fall as mortgage borrowing hits four-year low
-
Loading... - caleb millie
- 17 Mar 2023
- 62 Views
- 0 Like
- 0 Comment
Housing market shows a slowdown as prices stabilize; volume of real estate transactions down 39% year-on-year
After a period of sharper increases, housing prices rose by just 0.1 percent from December 2022 to January 2023, taking year-on-year inflation in the market to 14.6% compared to the same period in December 2021 to January 2022, according to new figures released this week by the Central Bureau of Statistics (CBS).
In September-October 2022, the annual rise from the same period in 2021 was calculated at 20.3%, among the sharpest increases for house prices.
But between October 2022 and January 2023, home prices rose by a total of just 0.5%, according to CBS’ most recent report. An actual fall in housing prices was recorded in the high-demand areas of Tel Aviv (- 0.5%) and Jerusalem (- 1.1%) as well as Haifa (- 0.9%), according to the report. Price increases of 1.3% were noted in central Israel, outside the Tel Aviv area.
This stabilization has coincided with a sharp drop in real estate transactions compared to last year and a consistent decrease in mortgage borrowing, according to separate reports by the Finance Ministry’s Chief Economist and the Bank of Israel, also released this week.
In January, just 7,093 homes changed hands, a reduction of 39% year-on-year and the lowest volume for the month of January since 2009, according to the Finance Ministry report, which said the drop in transactions was on par with decreases seen since April 2022 when the central bank began hiking the benchmark interest rate.
With prime interest rates now at 4.25% (as of February), the cost of borrowing is up as interest on home loans is typically somewhere between 5.5% and 6.5%. Controls on housing loans limit the amount of monthly household income that can be committed to mortgage payments (to no more than a third of expenses), again reducing the amount that can be borrowed. Read More…
