Housing Crisis Deepens as Building Remains Frozen

Apartment prices jump 4.4% in second quarter of 2014 - price of new apartments up 13% - as Netanyahu's construction freeze continues.

Contact Editor
Ari Yashar,

Construction site (file)
Construction site (file)
Flash 90

The Housing Ministry on Wednesday published figures showing that the price of apartments in Israel rose in the second quarter of 2014 by another 4.4% compared to the same quarter last year, as the ongoing housing crisis only continues to grow more serious.

The jump in prices during the period, which stretched from April to June, is thrown in more dramatic relief when looking only at new apartment prices, which rose by a whopping 13% compared to last year, with the average new apartment costing 1.6 million shekels (over $430,000), reports Calcalist.

When used apartments were thrown in, the overall average cost of buying an apartment was found to be 1.31 million shekels.

Another trend exposed in the figures, which were published a day after the end of the third quarter, showed how the number of new apartments costing under a million shekels dropped sharply, making up only 19% of the total new apartment sales in the second quarter as compared to 32% the previous year.

Unsurprisingly, there were less first-time buyers (27%, down from 38%) and more buying to repair apartments (46%, up from 39%), as well as more buyers from abroad (5.2%, up from 2.7%).

In geographic terms, new apartments were found to be further focused in the central coastal and Jerusalem area, making up 44% of the total sales in the quarter as opposed to 34% last year.

"Potential buyer's anticipation of the government program to get rid of VAT taxes (for first-time buyers)...contributed to the drop in the number of transactions for cheap apartment and in the periphery regions, as well as the drop in number of first-time apartment buyers," read a Housing Ministry statement.

However, the drop in sales in the "periphery" regions outside the central region that houses 70% of Israel's population has another, more political explanation as well.

Leaders in the Judea and Samaria communities, as well as in eastern Jerusalem, have recently revealed that Prime Minister Binyamin Netanyahu has completely frozen Jewish construction in the region in a "covert" building freeze.

The construction freeze has checked the natural growth of a region that is reportedly over 90% unpopulated. It also, together with the green light given to rampant illegal Arab construction in eastern Jerusalem, is part of what is charged as being an attempt to establish facts on the ground to divide Jerusalem.

The new figures on Wednesday found that the average price of an apartment in Jerusalem rose by 2.2% compared to last year, reaching 1.8 million shekels.

That escalation was even more dramatic in Tel Aviv, where the price skyrocketed by 12% to 2.4 million shekels.








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