The Israeli housing market staged a surprise recovery in June, with the most home sales recorded since the coronavirus broke out in March, the Finance Ministry’s chief economist reported on Tuesday. Sales were even higher than in June 2019.
The treasury said the number of transactions reached 10,900 in June, a 16% increase from a year earlier. That compared with about 6,200 in May and just over 2,000 in April.
Not counting homes that were sold as part of the government’s Machir L’Mishtaken program, sales were up year on year by 10% to 9,100 units, the treasury said. Some 4,200 new homes were sold in the month, the highest monthly level this year.
The rise appears to have been due to pent-up demand and delayed deals arising from the coronavirus lockdown, which ended in the middle of May. Nevertheless, real estate industry sources said activity remained strong in July and probably continue that way this month.
“We expect that August will continue the record levels we saw in July,” said Dror Ohev Zion, CEO of the developer DARA Projects. Ronny Cohen, CEO of Eldar Marketing, estimated his company’s sales were up 15% over June.
The reduction in the purchase tax on second and third homes to 5% from 8% approved last month hasn’t yet had an impact on sales because it only went into effect July 29. Investors bought 2,100 homes in June, unchanged from a year ago, the treasury said.
The tax cut is expected to encourage property investors back in the market, but not by much for the time being, the chief economist’s report said.
“It’s reasonable to assume that as long as there isn’t a significant improvement in the job market, the increased home purchases by investors in response to the lower tax rate will be too small to offset the effect of cutting the tax,” it said.