The Residential Property Price Index (RPPI) – Third Quarter 2022
The index has slightly increased
The PMA has released the results of its Residential Property Price Index in Palestine (RPPI) for the third quarter of 2022[1], which revealed a slight increase in the overall index by 1%, reaching 113.8 points. This result was in light of similar trends over the two sub-indices. The houses price index, which has slightly increased to around 118.3 points, and the price index of apartments that rose to about 107.3 points.
Despite the former-mentioned increases, the overall index is hovering around the two previous quarters' value, indicating a relative stability in real estate prices in Palestine. This could be attributed to the lower demand amid increasing uncertainty locally and globally and its impact on consumer and investor confidence, in addition to the hike of goods and services prices and declining the purchasing power of consumers. However, the index maintained a higher level comparing to its corresponding value by around 5.5%.
[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.
The specification of the residential property plays a key role in determining its price. During the third quarter, more than half of the apartments for sale in Palestine were new, with an average area of about 154 m2, and mainly contained three bedrooms, three bathrooms and a balcony. Meanwhile, the average area of the houses for sale was about 270 m2. Most of those houses were new, and consisted of more than three bedrooms and at least three bathrooms. The prices of residential properties are affected by other factors beside the abovementioned, headed by the price of the land on which the property is located, in addition to the geographical location and neighborhood.
The Palestinian RPPI is published quarterly with the aim of monitoring the real estate market and price fluctuations in order to avoid possible price bubbles. Moreover, the index is used as an input for the economic policies, especially macroprudential policies, taking into account their important influence on individual decisions of consumption, savings, and investment.
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