Globes, Eric Mirowski, 14.02.2020
The annual rate of increase in the Tel Aviv area returns to the high levels we were accustomed to several years ago. According to Central Bureau of Statistics (CBS) data, despite a slight monthly decline recorded in the latest survey, housing prices in the district rose 5.7% during 2019. This is also reflected in an annual increase of about 6% in the level of transactions made in the last quarter of 2019. The increases in Tel Aviv are almost double the average increases in the entire country, reaching 3% per year.
On a monthly basis, the only district where price increases were recorded in the last month was Haifa District, where prices rose 0.7%; In the Southern District they remained standing, while in the other districts there were declines: in the north and in the center of 0.4%, and in Jerusalem and in Tel Aviv by 0.2% each.
However, in the annual view, the prices of apartments in the Tel Aviv District are the "prices" for housing prices. Another district that stood out this year was the Northern District, in which house prices rose by 3.8%. In the other districts, annual increases were lower than the overall average: in Haifa they increased by 1.8%, in the center they increased by 1%, while in the south and in the Jerusalem district they increased by 0.8% in the last year. In other words, there is a clear signal here from Tel Aviv that the declines that hit the district during 2018 (which was about 4%) were stopped, and that the market is starting to open another price gap between the apartments in this district and other districts.
Usually when house prices go up, the average price of a deal also goes up. It is important to note that there is no identity between the two concepts: As the public flocked to buy cheap apartments in the periphery, as happened in recent years, the prices of the deals made did go down, but the house price index did not necessarily fall. In recent times it has been rising, since despite the relative minority of deals in more expensive apartments - their prices have not fallen. An annual check, the last quarter of 2018 compared to the last quarter of 2019, shows that the level of transaction prices in Tel Aviv recorded an average increase of 6% and in the last quarter of 2019 it reached NIS 2.21 million. This compares with an average transaction in Israel, totaling NIS 1.53 million in the last quarter of 2019 - an increase of 0.7% compared to the average price in 2018.
Fall in house prices in the Jerusalem District
An interesting story is happening in the Jerusalem district: where transaction prices fell 14% in the past year, from more than NIS 1.8 million to a low of NIS 1.55 million. It can be estimated that prices in this district were affected by a plurality of price transactions for a resident registered in Jerusalem and Beit Shemesh (which are not filtered in the same way as in the housing price index), because in the end the district's housing price index recorded an increase.
In the Northern District, which also stands out in the housing price index, the level of transactions also increased by 3.8% to NIS 942,000 from the average price of an apartment purchased in the last quarter of this year; In the Central Transaction Prices District, it increased by 5.7% from the last quarter of 2018 to that of 2019 to NIS 1.84 million, in Haifa a modest 0.1% increase in transaction prices to NIS 1.22 million, while in the south, transaction prices rose by half a percent to NIS 1.1 million.
The index of new housing prices can give another indication of the recent period's trend. This index averages the prices of all purchased contractor dwellings, including those purchased as part of the cost per dwelling. The large number of transactions made in subsidized apartments in the past month under the government operation lowered this index to a few months ago, but in the last two months it actually recorded increases, and in the end totaled 3% this year. It is unclear what happened to the prices of new homes sold in the free market.
If we go back to Tel Aviv, what characterizes this district is a significant minority of apartments sold as part of a price to the consumer and therefore the free market - it is the dominant one. Yesterday, CBS announced that Ramat Gan was at the head of the new housing sales table in Israel in the last quarter of 2019 with 810 apartments sold; 400 in Tel Aviv were sold, while in Herzliya - 386 new apartments. Most of the other places that sold new apartments in the same quarter - Shoham, Beer Yaakov, Jerusalem Beersheba, Sderot, Beit Shemesh and more - have done so within the framework of the cost of the apartment, so the price gaps between the Tel Aviv area and the rest of the country are rising.
What will happen next? It is likely that due to political paralysis, repeated and low interest rates, the trend of price increases will continue. What will happen after the election? This is already a question that no one seems to know the answer to.