The Residential Property Price Index (RPPI) 2023-Q1

Stability in the index value

The PMA has released the results of its Residential Property Price Index in Palestine (RPPI) for the first quarter of 2023[1]. The results revealed stability in the overall index, at around 113.7 points, compared to the previous quarter. Where, the houses price index has slightly increased by almost 0.4%, reaching 119.2 points, while the index of apartments has declined by 0.7% to 105.5 points. Furthermore, the index increased slightly by 0.4% compared to the corresponding quarter in 2022, due to an increase in the houses index (by almost 1.40%), whereas the apartment index declined by almost the same percentage (1.45%).

Figure one shows stability in the value of the index during the last year. This could be attributed to the increasing uncertainty (locally and globally) and its impact on consumer and investor confidence, the policies of deliberate closure by the occupation, in addition to the noticeable increase in prices of construction materials and the deterioration of purchasing power of consumers.

Figure 1: Residential Property Price index in Palestine (point)

Source: PMA (May 2023), Residential property price index in Palestine. First quarter 2023.

               2018 Q1 =100.

However, the specification of the residential property plays a key role in determining its price. During this quarter, more than half of the apartments for sale in Palestine were new, with an average area of about 160 m², and mainly contained three bedrooms, less than three bathrooms, and a balcony. As for houses, the data showed an increase in the average area of houses for sale during the quarter to about 316 m², most of them were new and consisted of more than three bedrooms and at least three bathrooms. Moreover, the prices of residential properties are affected by other factors, headed by the price of the land, the geographical location, and the neighborhood.

Table 1: Residential Property Price index in Palestine (point)

Source: PMA (May 2023), Residential property price index in Palestine. First quarter 2023.

               2018 Q1 =100.

The RPPI index is published on a quarterly basis 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 economic policies, especially macroprudential policies, taking into account their impact on individual decisions of consumption, savings, and investment.