Housing demand up 13% in December

New home sales rose 10% in 2010.
Housing demand rose 13% in December 2010, compared with November of the same year, the Central Bureau of Statistics in Israel reported today,

21,498 new homes (both privately and publicly built) were sold in 2010, 10% more than the 19,975 new homes sold in 2009.

Petah Tikva was the city with the highest demand for new homes in 2010, at 2,453 apartments, of which 2,268 were sold. It was followed by Jerusalem, Tel Aviv, and Ashkelon (where sales almost doubled compared with 2009), Netanya, Rishon LeZion, Kfar Saba, Ashdod, Rehovot, and Beersheva.

Tight supply will raise home prices

Bank Leumi stated, "Since the start of the year, there has been a rise in new home sales due to the increase in demand, while we're seeing that the present supply is insufficient to maintain the multi-year equilibrium without raising prices. It further adds that the interest rate hike by itself will not help to reduce housing prices, since it is necessary to increase the supply of new homes.

Apartment prices rose over the past 12 months because of the limited supply and the low interest rate, which rendered other investment instruments less worthwhile.

The Central Bureau of Statistics stated that there were 14,790 housing starts in the first half of 2009, 3.3% fewer than in the first half of 2008. It estimates that the current rate of housing starts will result in a shortfall of at least 8,000 homes compared with demand.