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Investors return to real estate: a three-year record for purchases in August

The public purchased 10,500 apartments in August, an increase of 23% compared to August 2019 and of 8% compared to July.

Only in August 2009 were more transactions recorded than in all the August months of the last 20 years

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• Real Estate

Arik Mirowski

Tuesday, 27 October 2020, 14:18

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Are real estate investors returning to the market? August continued the trend of increased apartment purchases recorded in June and July, with the most notable finding being the record of 3-year purchases made by real estate investors, following a reduction in purchase tax.

This is according to data from the chief economist at the Ministry of Finance.

The public purchased 10,500 apartments in August, an increase of 23% compared to August 2019 and of 8% compared to July;

Only in August 2009 were more transactions recorded than in all the August months of the last 20 years.

The contractors' reports of a significant increase in the number of apartments they are selling are backed up by official data, as they sold 4,000 new apartments in August, of which 1,500 apartments were priced per occupant.

2,500 new apartments sold in the free market were one of the highest monthly volumes recorded in recent months.

In general, the chief economist speaks of the recent period in real estate as a volatile period, characterized by an intermittent rise and fall in the number of transactions. "Such a phenomenon is unusual in the local real estate market and suggests the high uncertainty in the market," she said in a review. Something similar in the market for at least the last 20 years.

Indeed, the impact of the corona is not yet evident in apartment prices, but in the conduct of the market.

After the first closure, which led to a sharp reduction in the number of real estate transactions carried out in March-May, June-August, buyers stormed the apartments and a monthly average purchase of more than ten thousand apartments, while the multi-year average average of apartment purchases reaches 9,000 only.

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The tax went down - and investors came in (Photo: Reuven Castro)

All segments of the market - young couples, housing developers and investors - recorded high purchase figures, but those who stood out among the three were the last.

Investors purchased 1,600 apartments in August, a record high of 3 years.

This is an increase of 55% compared to August 2019 and 87% relative to July 2020, and the reason for this is the reduction of the purchase tax on apartments for investors, announced by Finance Minister Israel Katz at the end of July.

Is this a comeback of investors to the market? The big deals? The chief economist is unsure: "It is possible that the increase in investor purchases in August was affected by the postponement of purchases from July.

Another indication of this is obtained from the fact that compared to August last year there was also a significant increase in investor purchases, but in quantitative terms "single apartment" purchases in the free market increased even more (and the tax rate on these apartments did not change).

Ie not necessarily be attributed to the increase in purchases of investors compared to August last year exclusively for the cause of reducing the tax rate, "says the review. The fact that the share market has crossed the first time in a year and a half the 15%.

Among other things tested mix of apartments purchased by investors and indicated that this is a particularly inexpensive apartments.

further examination of the nature of the investors showed that at least some investors of August 2020 are retired, what witnesses about their desire to create their own current receipts from rent, rather than to achieve capital gains through rising prices.

on the other hand, Also in August, the balance between the purchase of apartments and the investment in the sale of apartments by investors showed a shortage in inventory. While investors purchased 1,600 apartments, they sold 1,800 apartments, and in total from mid-2016, the inventory of apartments held by investors fell by 26,000, a figure that could be critical. When the economic corona recession hits its peak.

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