Investors are hitting the market in search of vacant apartments.
Madness-madness-madness.
At least for the next two weeks it will happen even harder, until the high purchase tax on a second apartment or more returns to the 8% level, according to the government plan.
Investors, it turns out, even before the announcement of the increased purchase tax refund, purchased about 3,000 apartments in August, a sharp increase of 71% compared to August last year.
In doing so they continue to lead the increase in total transactions.
In the first eight months of the year, 20,000 apartments were purchased by investors, more than the annual amount they purchased in each of the last 4 years.
And meanwhile, with or without a connection, the market is on fire, not to mention boiling to historic highs.
According to the chief economist at the Ministry of Finance, 14.1 thousand apartments were purchased in August, the highest level since the historical record recorded in June 2015 (against the background of early purchases by investors that month, before the purchase tax on them was heavier).
Compared to August last year, this is an increase of 31%, when it should be noted that the level of transactions in August last year was high in itself, partly due to a jump in investor purchases after lowering the purchase tax to 5% at the end of July that year.
Compared to last July, there was an 8% increase in the number of transactions.
Investors' seismographs are high in the market today for one reason: there is nothing to do with available money other than real estate.
How significant is this to market change, other than hurting self-employed retirees who want to do something positive with money?
Nothing out of nothing.
Before the tax reduction one in 15 apartments was purchased by investors, and now one in 5 apartments.
Although this is a threefold increase, the multiplier is 7%.
"Investors are not the problem," explains attorney Shai Adulam, a planning and construction expert.
What will lower prices?
Only one solution is combined - high supply with fast construction in agile planning procedures.
It's happening all over the world.
Only with us does bureaucracy kill.
Every government tries to cope and fails miserably.
Average price of an apartment for investment, Photo: Data: Division of Chief Economist, Ministry of Finance
Looking for cheap areas
An analysis of the price levels of apartments purchased by investors in August this year, compared to August 2019, shows that despite the significant increase in apartment prices in that period (12% increase according to the CBS index), the average price of apartments purchased by investors in August this year was only 5% higher. Compared to August 2019.
The explanation for this is due in part to a change in the geographical mix of investor purchases to cheaper areas, a fact that is also reflected in a significantly lower purchase tax level than in demand areas, due to the difference in the price of the apartment.
So what's wrong with investors believing in the periphery and increasing the supply of apartments for rent there?
Government solutions.
Number of transactions in August, Photo: Data: Division of Chief Economist, Ministry of Finance
In a geographical segmentation, it was found that the sharp increase in contractors' sales in August in the free market compared with August last year encompassed all areas, except for the Jerusalem area, where there was actually a 25% decrease in sales.
This decline is largely due to a particularly high level recorded in contractor sales in this area in August last year.
The Tel Aviv area continues to stand out with sharp growth rates in contractors' sales, when last August the total sales were 514 apartments, double compared to August last year.
A significant portion of these sales were concentrated in Bat Yam, against the background of a sales campaign for a member club by Maoz Daniel.
The sharpest growth rate in contractors' sales in the free market was recorded in the Nof Hagalil / Nazareth area, which is usually characterized by low levels of transactions.
In August, 219 new apartments in the free market were sold in this area, an increase of 320% compared to August last year.