Data from the Chief Economist at the Ministry of Finance indicate that in the second quarter of 2024, 23,556 homes were sold—a jump of 36.5% compared to the same quarter last year. The volume of first-home transactions in the open market surged by 54%. The share of new homes purchased by investors reached a decade high. The South leads in contractor sales in the free market. There was a 75% increase in purchases by foreign residents in Jerusalem.
By Dror Nir Castel, Nadlan Center
After prolonged declines, investors are returning to the real estate market. This is evident from today’s real estate report for the second quarter of 2024 published by the Chief Economist’s Office at the Ministry of Finance. The data show that 3,289 homes were purchased for investment—an increase of 45% compared to the same quarter last year and a 7% rise from the previous quarter. In the first two quarters of 2024, there was growth in investor purchases following sharp declines since the first quarter of 2022, when investor purchases hit a low not seen since 2020.
The reasons for the return of investors include financing deals from contractors for new homes sold “off-plan,” making investment purchases more attractive, along with a decline in the real interest rate set by the Bank of Israel in the first two quarters of 2024—contrasting the continuous increases that began in the third quarter of 2022. This decline has reduced mortgage financing costs, making real estate investment more appealing. Additionally, many investors anticipate that housing prices will rise, viewing current home purchases as a good investment opportunity. However, the share of investors among all buyers remains low at 16.3%.
New homes break investor records
The report indicates that the share of new homes in Israel purchased by investors reached a record high, at least in the last decade, of 51% in the second quarter of 2024. This increase is attributed, in part, to contractor financing deals and the perception that new homes are more attractive investments due to their modernity, along with the drop in interest rates. However, the report warns that rising interest rates could slow down purchase rates, and uncertainty regarding the economic situation may also impact investor decisions.
The total number of transactions in the second quarter of 2024 stands at 23,556 homes, reflecting a 36.5% increase compared to the same quarter last year and a 1% decrease from the previous quarter. The total transactions in the open market amounted to 21,662 homes, marking a sharp 40% increase from the same quarter last year and a 3% rise from the first quarter of this year.
In addition to the return of investors, the real estate report for the second quarter of 2024 highlights several other significant trends in the market, including a surge in first-home purchases. Similar to the increase in investor purchases, 11,334 first homes were sold, representing a 54% increase in first-home transactions in the open market compared to the same quarter last year. The breakdown of purchases indicates that first-time buyers prefer new homes, with a 98% increase compared to the same quarter the previous year and a 40% rise in second-hand home purchases, with new dwellings accounting for a record one-third of the free market.
Further data show a moderate recovery in second-hand sales in the second quarter, totaling 12,981 homes—up 22% compared to last year and 3% from the previous quarter. Despite this recovery, the number remains one of the lowest for second-hand transactions in the last twenty years.
The Southern region has relatively high transaction levels, totaling 3,996 homes. It led contractor sales in the open market, with an approximate 30% increase compared to the same quarter last year. In contrast, the Northern District, particularly the city of Haifa, continues to show weakness in the real estate market, with no town in the North making the list of the top twenty cities for sales in the second quarter—unlike the same quarter last year, which included Afula and Nahariya. Jerusalem remains the leading city for home sales, with over 1,000 homes sold.
Regarding increased interest from foreign residents, the Jerusalem area is the only region showing a notable increase in purchases by foreign residents, at 75%. Over half of the 458 homes sold to foreign residents this quarter were in the capital. Officials attribute this growth to the onset of the war and the desire of Jews in the diaspora to support Israel during this difficult time, especially in Jerusalem, a city of religious and national significance.
There has been no change in the luxury market from last year’s quarter, with 111 transactions; however, surprisingly, Ramat Hasharon ranked second with ten transactions, following Tel Aviv. There was also an 18% increase among upgraders compared to the same quarter last year, reaching 6,498 homes, halting the sharp and continuous decline in upgrader purchases that began in the first quarter of 2022.
