Press Release The Residential Property Price Index in Palestine- Third Quarter 2021

The overall index declined

The PMA has released the results of its Residential Property Price Index in Palestine for the third quarter of 2021[1]. The results show that the overall index declined by 2.3% compared to the previous quarter, registering 107.9 points. This came as a result of varying trends among the main two sub-indices; the houses’ index dropped by 4.1%, registering 109.7 points, while apartments’ index increased slightly by 0.8%, recording 105.4 points.

Usually, the price of a property is affected by many factors and specifications, most prominently: the price of the land on which the property is located, in addition to the geographical location and neighborhood, type (apartment or house), condition of the property (new or used), property area, and land area (for houses). Adding to that, the age of the property, the number of bedrooms and bathrooms, services attached to the property such as central heating, parking, an elevator (in the case of apartments), and others.

It is important to note that selling and purchasing houses in Palestine is relatively low compared to apartments, for several reasons. One main reason behind this is the high prices under the scarcity of lands available for construction. Accordingly, real estate developers tend to focus more on building apartments at the expense of houses, particularly in city centers. In this context, the price index of apartments increased in the West Bank by 1.1% during the third quarter, reaching 106.2 points, while it increased slightly in Gaza Strip by 0.1%, to around 103.6 points.

The PMA construct this index aiming at monitoring the real-estate market and its prices’ fluctuations in order to avoid possible price bubbles. Moreover, it uses this index as an input for the economic policies, especially macroprudential policies, taking into account their important influence on individual decisions of consumption, savings, and investment[3].

[1] The RPP index represents the overall trend of the average prices of apartments and houses in Palestine. For more information about the methodology, please see the working paper “Residential Property Price Index for Palestine”, PMA 2021 published on the PMA website, www.pma.ps.

[2] The data series has been revised, where the outliers have been excluded.

[3] In 2018, the PMA started building an index for residential property prices in Palestine in accordance with the best international standards and practices, using the offer price, given the lack of data on the actual selling prices from any official entity.

Source: Palestine Monetary Authority