High-end home sales on the rise in Israel

The luxury housing market is recovering compared to the start of the war, although sales are still relatively low, reflecting the overall market, the Finance Ministry’s latest quarterly survey of the property market’s chief economist showed.

The report also reveals that there has been a rise in apartments purchased by foreign residents in Jerusalem, although the total number of homes in Israel purchased by foreign residents in the first nine months after the start of the war is at historic lows.

In the second quarter of 2024, 111 homes were purchased for more than NIS 10 million – a figure similar to the corresponding quarter of 2023 and 39% higher than in the first quarter of 2024.

Tel Aviv and Ramat Hasharon are at the top of the list

Half of the homes purchased for more than NIS 10 million in the second quarter of 2024 were in Tel Aviv. The surprising number in the survey was that the city that saw the second largest luxury home sales was Ramat Hasharon with 10 deals. Jerusalem and Herzliya usually compete for second place, but in Jerusalem there was a sharp decline in deals worth more than NIS 10 million.

The chief economist explains that the jump in the number of high-end homes purchased in the second quarter compared to the first quarter is due to the fact that this sector suffered more at the beginning of the war than the housing market in general.

Partial data for the third quarter of 2024, which includes deals completed in July and August, indicate that the recovery of deals in the luxury goods market segment continued in July, but in August there was a slowdown. It is assumed that in the overall market, July was a relatively strong month, while August was weak.

As mentioned, Tel Aviv topped the luxury apartment market in the second quarter of the year with a fairly normal rate in the number of luxury apartments purchased there. Ramat Hasharon came in second place, with seven of the ten homes purchased being used homes. These were mainly houses in the west of the city.

Two other cities in the Sharon area ranked third and fourth in terms of the number of luxury homes sold in the second quarter – Herzliya and Raanana with nine and eight homes sold.

The chief economist found that the average price of luxury homes in Ramat Hasharon reached NIS 12 million, the lowest average price in the leading cities. Jerusalem topped with an average price of NIS 23 million in the second quarter, and Tel Aviv came in second place with an average price of NIS 16 million.

Foreign residents bought 458 homes in the second quarter

In the second quarter of 2024, foreign residents bought 458 homes in Israel, 43% more than in the corresponding quarter of 2023 and 44% more than in the first quarter of 2024. However, overall, only 140 additional homes were purchased by foreign residents , so this was no dramatic rise. The only location where there was a significant increase in the number of homes purchased by foreign residents was Jerusalem where 264 homes were purchased, the most of any city in Israel. The number of purchases by foreign residents in Tel Aviv remained unchanged.

The chief economist also examined the proportion of real estate investors who sold their apartments at a real loss (i.e., the selling price was lower than the real purchase price), and found that, similar to the situation before the war, the region with the highest rate of sales at a loss was the South, where it recorded nearly A quarter of investors who sold apartments lost.

Beersheba topped the “loss table” with about 27% of investor sales in the second quarter that witnessed losses, followed by Ashkelon with about 22%, Eilat 18%, and Kiryat Gat 17%.

But the cities of the central region were also on the list, led by the city of Petah Tikva, where about 17% of the deals completed by investors resulted in losses, although the chief economist explains that only 47 deals were completed in the city. However, also in Bat Yam, Bnei Brak and Ashdod, a relatively large proportion (about 10%) of apartments were sold at a real loss by investors.

Published by Globes, Israel Business News – en.globes.co.il – on October 30, 2024.

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