Housing prices drop for first time in three years

The nation’s housing prices fell by 0.2% last month – the first drop in three years, the Central Bureau of Statistics said on Friday.

The price of new apartments also decreased by 0.3%, although compared to the same period last year, apartment prices increased by 12.7%.

In the breakdown of apartment price changes by districts, decreases were recorded in several central districts. In Jerusalem, prices fell by 1.1% and in Tel Aviv and Haifa, by 0.5%. In the South, prices fell by 1.5%, although in the North, prices rose by 2.2% and in the Center, by 0.3%.

Inflation also slowed

The inflation also showed a decrease of 0.2%. This comes after the consumer price index increased by 5% in the last 12 months, compared to last month when it increased by 5.2%.

In contrast, in the last month the index rose by 0.4%. This, in spite of the Bank of Israel’s attempts to slow the price increases by providing a higher interest rate each time.

Notable price increases were recorded in clothing items, which increased by 4.1%, culture and entertainment, which increased by 0.9%, and housing, which increased by 0.6%.

Notable price decreases were also seen in the categories of fresh fruit, which decreased by 2.8%, and furniture, materials and household maintenance products, which decreased by 1.6% each.

On Friday, Israel's credit rating is expected to be published by the international research institute "Moody's", amid fears that the rating would drop due to the effects of the proposed changes in the judicial system.

About a month and a half ago, a study was published by Moody's, warning of a drop in the credit rating in the long term if the judicial reform legislation continued, which was before the negotiation procedures at the President's Residence began.

Regarding rent, there was a price increase of 4.2% for tenants who renewed a contract, and of about 7.2% for new tenants. Also, the input price index in residential construction rose by 0.2% this month, and by 3.7% during the year. This is mainly due to the increase in the prices of materials and products, and in the prices of labor wages by 0.9%.

Compared to the corresponding period last year, price increases were recorded in all districts: North – 17.2%, Center – 14.6%, Haifa – 13.6%, Tel Aviv – 11.1%, Jerusalem – 10.1, and South – 9.1%.

Politicians react to the new statistics

“By working in the right way, you win. Since I took office, I have made it a top goal to hedge inflation and maintain the value of money,” Finance Minister Bezalel Smotrich said in reaction to the publication of the new statistics. “This is what accompanied me and the professionals in the office in building the state budget, in signing the graded agreement with the Histadrut, and in other steps we took for the benefit of the public.

“And with the help of God, this is just the beginning. Dismantling monopolies, reducing regulation and persistently fighting against the cost of living through a free and competitive economy are our goals in the coming period for the sake of Israel’s economy – for your sake!” Smotrich wrote on his Twitter account.

Former construction and housing minister MK Ze’ev Elkin took credit for the decrease of housing prices in his reaction via Twitter.

“We said that in 2023 the increase in housing prices would be curbed and here it is: today it was announced that apartment prices will decrease in the months of January-February 2023. It is important to keep the pace. Minister [Yitzhak] Goldknopf, insist on more than 100,000 marketings and no less than 30,000 discounted apartments this year as well! Don’t agree to the Finance Ministry plan to severely harm discounts for young couples.”