The Residential Property Price Index in Palestine (RPPI)– Fourth Quarter 2021
The overall index has stabilized
The PMA has released the results of its Residential Property Price Index in Palestine (RPPI) for the fourth quarter of 2021[1], which revealed relative stability of the overall index at around 108 points. This came due to the varying trends among the main two sub-indices, albeit at a marginal degree. While the houses price index increased by around 1.2% compared to the previous quarter, the prices of apartments have dropped in most Palestinian areas by around 1.6% during the same period.
In general, residential property prices in Palestine have relatively stabilized during the last quarter of 2021. This comes after a two-year of fluctuations under uncertain conditions in light of the coronavirus crisis (see figure 1). In the same context, it is important to mention that 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.
Moreover, RPPI represents the real estate prices' activity based on the bid price (price by sellers or real estate developers). This price 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. One main reason behind this is the high cost of houses, due to land scarcity. Accordingly, real estate developers tend to focus more on apartments rather than houses, particularly in city centers.
[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.
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