Average home costs smaller number of salaries
An Israeli home costs 127 average salaries to buy, according to the Ministry of Housing, down from 131 salaries in 2011.
19 September 12 09:32, Einat Paz-Frankel
The average home price in Israel was NIS 1.15 million at the end of June 2012, weighted for the proportion of new and second-hand home sales. The average salary at the end of June was NIS 8,974, which means that the average home costs 127 average salaries to buy, according to the Ministry of Housing and Construction's report for the first half of 2012.
The number of average salaries needed to buy the average home slightly improved from the 131 salaries needed in 2011, but is worse compared with the 103 average salaries needed in 2008. According to the Ministry of Housing, the nominal price of the average home rose 37% in 2008-12. Inflation during this period was 2.2-3.9% a year, the average salary rose by 7%, and the average home price rose by 34% in real terms.
182 average salaries are needed to buy a second-hand five-room apartment, and 87 average salaries are needed to buy a three-room apartment.
Ministry of Housing Information and Economic Analysis Department director Yossi Shevet said, "Even though the number of salaries needed to by an apartment has greatly increased in recent years, the main reason for this increase is the fact that salaries have risen by just 7% in real terms since 2005, while GDP has increased by 36%, and home prices have risen by 34% in real terms. In other words, the rise in home prices was less than the increase in GDP, but because real salary growth was much lower, there has been a sharp rise in the number of salaries needed to buy a home."
The Ministry of Housing added that the average home price, weighted for the proportion of new and second-hand home sales, was 2% lower in the second quarter than in the corresponding quarter of 2011, but 0.2% higher than in the preceding quarter.
"Home prices have been stable, because supply and demand are in equilibrium," says Shevet. "However, prices for new homes, which account for a quarter of all home purchases, fell by 10%, compared with the corresponding quarter, while second-hand home prices rose by 1%."
The Ministry of Housing adds that the average rent rose by 4% during the first half of 2012 to NIS 3,255 at the end of June.
Published by Globes [online], Israel business news - www.globes-online.com - on September 19, 2012