The PMA Residential Property Price Index – Q1 2020

An increase in the overall index

The PMA has released the results of its Residential Property Price Index in Palestine[1] for the first quarter of 2021. The results indicate an increase in the overall index at the level of Palestine by about 3.8 percent compared to the fourth quarter of 2020 (q-o-q), to 110.1 points, due to the increase in both indices, the apartments and the houses. The apartment index increased by 6.4 percent from its level in the fourth quarter of 2020, to 103.7 points. While the house index increased by 2.2 percent during the same period, to 114.5 points.

While on the annual level, the overall index in Palestine witnessed an increase of about 4.1 percent, compared with the first quarter of 2020, due to the increase in the apartments index by about 9.1 percent, in addition to the houses index by 1.3 percent during the period.

Usually, announced price of the 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, land area on which the property is located (for houses). Adding to that, the age of the property, number of bedrooms and bathrooms, services attached to the property, such as central heating, cars parking, an elevator (in the case of apartments), and others.

Central banks’ interest in residential property markets stems from the important role that this type of assets plays in the economy, as fluctuations in property prices affect consumption, savings and investment decisions, and thus the overall economy and its indicators such as growth, unemployment, price levels, income and wealth. In addition to the comparisons purposes, within the same country or between different countries, as it provides real-time data about these assets, in terms of their prices, and characteristics.

Moreover, many international institutions such as the IMF, the World Bank, ILO, OECD, Eurostat, and others, recommend building such an indices for residential real estate to monitor changes and fluctuations in the prices of these properties and use them as an input for economic policies, especially macro prudential policies.

Since 2018, the PMA has started building an index for residential property prices in Palestine (apartments and houses), 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. Since the beginning of 2021, the PMA has started publishing the results of this index on a quarterly basis, through a press release in Arabic and English.