Mishkan Home Buyers Index drops 1.6% in January as prices continue to rise
Posted on 19. Feb, 2010 by Buy-It In Israel Staff in Israel Real Estate
Financial conditions for buyers of real estate in Israel worsened in January as house prices are continuing to rise and Israel mortgages are becoming more expensive, according to Bank Hapoalim’s Mishkan Home Buyers Index. The Mishkan Home Buyers Index, which monitors the financial conditions affecting home buyers in Israel, dropped by 2.2 points falling to 138.1 points in January, representing a decline of 1.6 percent.
The Mishkan home buyers index is a monthly measure, which tracks the financial conditions affecting home buyers in Israel. It is composed of four variables published by the Bank of Israel and the Central Bureau of Statistics: the mortgage interest rate, apartment prices, the average salary, and the unemployment rate. A rise in the Mishkan Index reflects improved conditions for home buyers and a fall a deterioration in conditions making it harder for home buyers to purchase an apartment.
Bank Hapoalim attributed the deterioration in the condition of home buyers in recent months mainly to the continuing increase in home prices. According to the Israeli Central Bureau of Statistics, home prices rose last month by 1.0 percent. In the last 12 months, home prices in Israel rose sharply by 19.6 percent in nominal terms and 13.6 percent in real terms. Since mid-year 2007 home prices surged by 37 percent in nominal terms and by 19 percent in real terms. The Mishkan Index reached a peak of 171 points in July 2008 and has since declined by 19 percent reflecting a sharp deterioration in home buyers financial conditions.
Furthermore, the average interest on 17-20 year mortgage loans (fixed rate, CPI linked), as published by the Bank of Israel, rose by 0.8 percentage points from 3.60 percent a month ago to 3.68 percent. On the other hand, a moderate increase in average wages mitigated the decline in the Index. As a result, Bank Hapoalim said the rising home prices combined with higher interest rates increase the monthly mortgage payments burdening buyers of homes in Israel.
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