In recent months there has been a slowdown in the real estate market in all of Israel’s cities, and the local market is no exception. In 4Q 2022, 795 apartment purchase transactions were recorded in Jerusalem, a significant decline, compared both with the preceding quarter (1,323 transactions) and with the same quarter of the previous year (1,751), as seen by CBS statistics (taken from capital gains tax data on real estate transactions).
This trend is not unique to Jerusalem. A look at all purchase transactions in Israel in the last quarter (13,733) indicates a sharp decrease in the number of transactions compared to the preceding quarter (19,969) and compared to the fourth quarter of 2021 (30,039).
Analysis of the data by apartment size (in number of rooms) shows that for 2.5-3 bedroom (mid-size) apartments in Jerusalem, the number of transactions (565) peaked in 4Q 2021 and has been declining since, reaching 293 in 4Q 2022. As far as prices, 2Q 2022 showed particularly high prices (average of 2.92 million ILS for an apartment of that size); it is unclear whether the two subsequent quarters that showed lower prices (2.78 and 2.87 million ILS, respectively) indicate a stabilization, or a continued trend of gradual price increase in which 2Q 2022 is an outlier.
From a national perspective, all cities in Israel showed a sharply decreasing trend in transactions in 4Q 2022. In Tel Aviv, for example, 280 apartments (of all sizes) were sold, compared to 617 in 3Q 2022; in Haifa – 629 vs. 1,154. As far as prices of mid-size apartments, the trend in Tel Aviv is similar to Jerusalem (continuous increase with an unclear trend in the last three quarters), while Haifa saw a sharp increase in prices in the last quarter.
Let us stress that the sharp decline in the number of transactions implies that a price increase could be due to a decline in the number of transactions in the cheaper apartment segment (raising the average price) and not necessarily from identical apartments being sold for a higher price than in the past.