According to the Israel Housing Price Index published last week, real estate prices in Israel have risen by 1% in the past month and 4.6% in the last six months. In May, homebuyers took out NIS 9.5 billion in mortgages – an all-time high. In the first four months of 2021, more than 15,000 new apartments were sold – another record figure. The most sought-after location in the country is the southern coastal city of Ashkelon, which suffered heavy rocket attacks during Operation Guardian of the Wall.
Based on the Israel Housing Price Index published this week by the Central Bureau of Statistics (CBS), both Israel real estate prices and the house price growth rate in Israel continue to rise. According to the data, housing prices rose by 1% between March and April 2021, bringing the total number over the last twelve months to 5.6%.
A closer look, however, reveals that in the last six months alone, between October 2020 and April 2021, the rate of price increase was 4.6%. In other words, the annual rate is approaching 10%, a staggering jump that the Israeli housing market hasn’t seen for a decade.
The Jerusalem district experienced the sharpest rise in housing prices over the course of the last year, with a 1.6% jump in just one month. In the Tel Aviv district, which includes Israel’s most expensive city, Tel Aviv, as well as other cities in Gush Dan, there was a 1.4% increase in prices. Haifa and the North saw a 1.2% increase in prices, while real estate prices in the Centre rose by a modest 0.9%. In the South, prices actually dropped by 0.6%.
An examination of the situation over the past six months alone, however, indicates that real estate prices in Israel actually went up the most in the Northern region (5.8%), followed by the Central district (5.2%), Haifa (5%), Jerusalem (4.3%), Tel Aviv (3.8%), and the South (3.4%).
This week, the CBS also published record-breaking data on the demand for new apartments. In total, more than 15,000 new homes were sold in the first quarter of 2021, the highest figure recorded since the State began keeping track of the numbers about fifteen years ago. According to the CBS, since May 2020, the rate of purchase of new apartments has increased at an average rate of 2.2% every month.
Over the three months of February to April 2021, the largest number of new apartments were sold in the southern coastal city of Ashkelon, where 951 apartments were purchased during this period. However, it will be interesting to keep an eye on the continued level of demand in the city, considering it suffered heavy rocket attacks during Operation Guardian of the Wall in May due to its proximity to the Gaza Strip.
Next on the list is Tel Aviv, quite far behind Ashkelon with about 700 new apartments sold over this period, followed by Ramat Gan with 600, the northern coastal city of Nahariya with 510, and Jerusalem with 400 apartments. Other prominent cities that made the list include Netanya (400 apartments sold), Beit Shemesh (350), Kiryat Ono (350), and Rishon Lezion (300). It is likely that Ashkelon and Nahariya ranked so high mainly due to subsidized sales to young couples as part of the Buyer’s Price program (mechir l’mishtaken).
Besides rising real estate prices, another indication of the high level of demand for apartments in Israel can be seen through mortgage figures, which are also breaking historical records. This week, the Bank of Israel announced that in May, the Israeli public took out mortgage loans totaling NIS 9.5 billion, the highest figure ever for just one month.
In total, in the first five months of 2021, Israelis took out mortgages of more than NIS 40 billion. If this rate continues, 2021 is expected to see mortgage loans of close to NIS 100 billion, while the current annual record is NIS 78.1 billion from 2020.