The contractors are on the wave: financing operations of contractors contribute to the recovery in the sale of new apartments, while second-hand sales add to the faltering. This is according to a report published today (Thursday) by the Chief Economist at the Ministry of Finance.
According to the report, in the month of February 2024, the recovery in the number of transactions continued, after the slump in transactions in the first two months of the War of Iron Swords. The total number of apartments sold (new and second hand) was 7,511, including government subsidized apartments. This is an increase of 19% compared to February last year, and a decrease of 7% compared to the month of January 2024, which preceded it.
The report indicates that the decrease in the overall number of apartments sold in February compared to January 2024 comes mainly due to a significant decrease of 11% in the sale of second-hand apartments in February, when only in the months of February of the Intifada years and February of last year was a lower level of transactions recorded.
On the other hand, the contractors' sales in February (3,644) marks a 34% increase compared to February last year (following a sharp increase of 36% recorded in the previous month compared to January last year) and a moderate decrease of 2% compared to January 2024 that preceded it. The report indicates that the volume of contractor sales last February is one of the highest recorded in the last 20 years.
We will remind you that the increase in contractor sales in the last two months is buffered by a continuous decrease in contractor sales in the free market (almost every month compared to the corresponding one in the previous year) that began in February 2022 and intensified after the start of the sequence of interest rate increases by the Bank of Israel in April 2022.
An interesting figure indicated by the report shows that the potential cash flow of the contractors The sale of new apartments recorded a sharp increase of 40% compared to February last year. However, based on the VAT reports of the contractors, it was found that there was actually a 9% decrease in the actual flow, a finding that hints at the contribution of the contractors' financing operations to the sales this month.
Beer Sheva area on the buyers' map
In a geographic segmentation of the contractors' sales in the free market compared to February last year, it was found that in almost all regions a sharp increase in these sales was recorded. It is interesting to see that the total sales by contractors in the free market in the southern Beer Sheva area was 431 apartments, the second highest level in a national comparison (low but slightly lower than the sales by contractors in the central area) and one of the highest levels in sales by contractors in the free market in this area in the months of February since the beginning of the 2000s.
In the segmentation of contractor sales in the free market in the Beer area, the cities of Netivat and Ofakim stand out, ranking only after Beer Sheva itself in these sales, with 80 apartments and 72 apartments respectively. It should be noted that Netivot stood out in these sales in January as well, with 110 apartments sold, the highest level in the entire Beer Sheva region that month.
It is interesting to see that the most prominent segment in these sales in Netivot was that of those for whom this is their first apartment, who accounted for 43% of the total number of buyers of new apartments in Netivot in February this year. The weight of investors in Netivot in February this year was only 19%, compared to 24% in February last year. In this context, it should be noted that in the past the investors were dominant in sales of this type ("presale"). It is likely that the increase in interest rates and the purchase tax contributed to pushing investors out, while on the other hand the financing operations of the contractors allow those for whom this is their first apartment to purchase residential apartments at relatively high rates.
Another interesting figure presented in the report on buyers in Netivot: looking at the wages of buyers in Netivot, the fact that the wage levels of first-time apartment buyers in February this year is significantly higher than the wage levels of this segment in purchases in Netivot in February last year (gross average wage of NIS 15.3 thousand compared to NIS 10.9 thousand Last year).
Accordingly, the price levels of the new apartments sold in Netivot in February this year were significantly higher compared to February last year (average price of 1.47 compared to 1.2 in February last year, without significant differences in the area of the apartments). At the same time, the fact that in at least some of these sales in February of this year, significant financing deals were given to buyers, for example financing terms of 20-80, without linkage and interest, reflect in practice a benefit that is not reflected in the price.