Data from the Ministry of Finance shows that December 2024 recorded an 85% increase in home sales compared to December 2023 and a 58% increase compared to December 2022. This surge is primarily due to the high level of new home purchases before the VAT increase in January 2025. The southern region is booming, with the highest number of sales since the early 2000s. First-time home purchases also reached a 15-year high.
By Dror Nir Castel, Nadlan Center
In December 2024, 11,261 apartments were purchased, including government-subsidized apartments. This is the highest number of home purchase transactions recorded since March 2022, mainly due to a high volume of new home purchases ahead of the VAT increase in January 2025. This is according to the report from the chief economist at the Ministry of Finance, published today (Wednesday). Compared to December 2023, when the market was still affected by the outbreak of the war, there was an 85% increase in the number of transactions. Even compared to December 2022, a sharp increase of 58%. A similar growth rate was recorded compared to November 2024.
Excluding sales under government subsidy, the total number of transactions in the free market in December stood at 9,872, 52% higher than in December 2023 and 79% higher than in the previous month.
New homes sales in December totaled 5,881 apartments, including government-subsidized apartments. Compared to December 2023, this represents an exceptional increase of 111% and an even higher growth rate of 118% compared to December 2022, with a 99% increase compared to the previous month. Excluding government-subsidized sales, contractor sales in the free market in December totaled 4,492 apartments, marking a 102% increase compared to December 2023, a 98% increase compared to December 2022, and a 95% increase compared to the previous month.
Geographically, the Be’er Sheva area (which includes Ashkelon, Ofakim, and Netivot) stands out, with 1,106 new apartments purchased in the free market, the second-highest level recorded in this area since the early 2000s. In the annual summary, 6,334 apartments were sold in this region, the highest level nationwide and a record level for this area since at least the early 2000s. This is the only region where contractor sales in the free market broke a record in 2024, surpassing the previous peak recorded in 2015 by 21%. Nationally, contractor sales in the free market in 2024 were 10% lower than the record set in 2021.
Saving 1%: Customers Advance Payments Before the VAT Increase
The actual cash flow of contractors from new home sales, based on reported transactions for VAT before deducting expenses, stood at an exceptionally high level of 15.5 billion shekels. An analysis of VAT data shows that many contractors reported high cash flow in December, even those who sold a relatively low number of apartments in recent months. These findings suggest that the high level of actual cash flow for contractors is primarily explained by the early payment of apartments due to be delivered this year (as a large portion of the payment is made upon delivery), to save 1% VAT on the total payment.
Another notable finding from the VAT data analysis among construction developers indicates high expense deductions in December, which amounted to 7.9 billion shekels compared to a monthly average of 4.4 billion shekels over the previous 12 months. This may suggest, among other things, a high level of activity at construction sites compared to the past year and/or payments to suppliers.
Following the first analysis of contractor financing benefits in the previous report, it was found that compared to November, there was a significant increase in the percentage of transactions that included a financing benefit. This percentage reached 47% in the central region, a 20-point increase compared to the previous month. In Tel Aviv, this rate stood at a third of sales, while in the Be’er Sheva region, it was 41%. In the Hadera area, this percentage reached 61%. The analysis covered only four regions.
Sharp Increase in Second-Hand Transactions
Second-hand sales in December totaled 5,380 apartments, marking a 63% increase compared to December 2023, a 21% increase compared to December 2022, and a 28% increase compared to the previous month. Unusually, this market segment accounted for less than half of all transactions, whereas in the past, it stood at around 70%, and in recent years, it has hovered around 58%.
Investor purchases in December totaled 1,892 apartments, a 77% increase compared to December 2023 and a similar rise to the previous month. As a percentage of total transactions, investor purchases in December accounted for 16.8%, one percentage point lower than in December 2023 but 1.5 percentage points higher than in the previous month. Investor sales in December totaled 1,838 apartments, a 78% increase compared to December 2023, a more moderate 19% increase compared to December 2022, and a 34% increase compared to the previous month.
Total purchases by foreign residents in December stood at 241 apartments, a 90% increase compared to December 2023 and a 72% increase compared to the previous month. However, unlike overall investment purchases—at their highest level since May 2022—this segment of foreign buyers did not reach its highest level in the past two years, mainly due to exceptionally high purchase levels in September, primarily driven by marketing campaigns in Beit Shemesh. Excluding apartments sold by foreign residents in December (43 apartments), net purchases by foreign residents in December amounted to 198 apartments, compared to 101 apartments in December 2023 and a similar level to December 2022.
First-Time Homebuyers: The Highest Rate in 15 Years
First-time home purchases in December totaled 6,747 apartments, including government-subsidized apartments, marking the highest level in at least 15 years and an increase of 101% compared to the previous December, 66% compared to the previous month, and 89% compared to December 2022.
Excluding government-subsidized purchases, first-time home purchases in the free market totaled 5,358 apartments, the highest level since December 2013. Compared to December 2023, this represents a sharp increase of 91% and a 71% increase compared to December 2022. Compared to the previous month, this is a 58% increase.
Housing upgraders purchased only 2,622 apartments, a 58% increase compared to the same period last year, a 30% increase compared to the previous month, and only a 10% increase compared to 2022.
