December 21, 2010 Market Update

We started the week with an overhaul by the Ministry of Finance of the Appreciation Tax here in Israel. In an attempt to bring more properties onto the market, the new tax regulations exempt owners who are looking to sell their second or third apartments in the next two years from the Appreciation Tax. This will, according to the Ministry, encourage investors to began selling, thus bringing in more volume to the market, only time will see what kind of effect this will have. Additionally, the purchase tax, paid by buyers and investors, will rise for the next two years, with the Government hoping that this will cool the investor’s market, thus bringing down housing prices, which the Bank of Israel has stated, “is concerned of reaching a bubble burst”. This however, could end up backfiring, quenching potential buyers overall. The Government is also cracking down on owners who have split their apartments into multiple units, many of which will surely be looking to sell them off, in Tel Aviv especially. Is it time to enter into these kind of properties? We might just have to wait and see. Read more details about the new Housing Plan here, courtesy of Globes, Israel Business News.