Save about NIS 700,000 (Photo: Main Economic Division, Ministry of Finance)
Meet the housing reducers
The analysis of the Chief Economist at the Ministry of Finance for the month of January today revealed a new phenomenon in the housing market: housing downsizers, housing improvers who, like the young couples, "surrendered" to the interest rate increases and therefore move from a large apartment to a small apartment, thus managing to save hundreds of thousands of shekels.
The chief economist decided to focus on housing improvers, meaning households that own an apartment and are interested in selling it and moving to another apartment.
Their name is derived from the premise that the new apartment they buy is bigger and more spacious than the one they sold, but this is not always the case.
The phenomenon of older people whose children have left home is well known, and they sell their apartment and move to a smaller apartment, therefore they can be defined as "housing downsizers".
According to the data of the chief economist at the Treasury, the volume of purchases made by the "housing developers" in January was 2,436 apartments - a sharp decrease of 42% compared to January last year.
This is the 11th month in a row that continues to record a decrease in the volume of purchases among home improvers.
"The analysis of the prices of the apartments purchased by the "housing improvers" compared to the price of the apartment they sold, shows that since April of last year, when the Bank of Israel began to raise interest rates, there has been a significant decrease in the proportion of those who did improve housing (that is, they bought an apartment more expensive than the one they sold). Thus, from of 75% in March last year, this rate dropped to 66% in January of this year. When moving between their old apartment and their new apartment, the housing "downsizers" saved an average of seven hundred thousand shekels (that is, they bought an apartment cheaper than the one they sold)," according to the report of the Treasury economist.
The data shows that the average price of the apartments they bought was NIS 1.6 million, while the average price of the apartments they sold was NIS 2.3 million.
Regarding those who actually improved housing (purchased an apartment more expensive than the one they sold), the data shows that they bought expensive apartments for NIS 732,000, compared to those who sold - which means that they bought an apartment for an average price of NIS 2.3 million and sold for an average price of NIS 1.56 million.
Transaction volumes decrease by tens of percent
From the data we learn that the increase in interest rates affects the number of real estate transactions. In January, the sharp decrease in the number of transactions continued, when they amounted to 7,093 (including government-subsidized apartments). This is a sharp decrease of 39% compared to January of last year. Contractors' sales in January amounted
to -2,541 apartments, a decrease of 42% compared to January of last year and a decrease of 5% compared to the previous month. Thus, the declines in contractor sales continue for the 12th month in a row. Excluding the transactions within the "Resident Price" framework, contractor sales in the free market amounted to 2,006 apartments, a decrease
of 29% compared to January last year and a decrease of 12% compared to the previous month.
The total number of transactions in second-hand apartments in January was 4,552, a sharp decrease of 37% compared to January last year. The month of January this year is considered the lowest in second-hand transactions since 2003, which was in the shadow of the second intifada .
In the housing improvers segment, after a long period in which investors led the decrease in purchases, in January of this year, those who led the decrease in transactions in January were "housing improvers" and first-time home buyers - decreases of 42% in purchases compared to January last year.
Investor purchases in January totaled 1,227 apartments, an 18% decrease compared to January last year.
Compared to the previous month, there was a 4% increase in these purchases.
Real estate
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