The Residential Property Price Index (RPPI) – Second Quarter 2022
The index has relatively stabilized
The PMA has released the results of its Residential Property Price Index in Palestine (RPPI) for the second quarter of 2022[1], which revealed a relative stabilization of the overall index at around 112.9 points compared to 113.2 points in the previous quarter. This result was in light of similar trends over the two sub-indices. The house price index has maintained almost the same value at around 117.2 points. Meanwhile, the price index of apartments has marginally declined by only 0.5% to reach 106.5 points. The stabilization of the index is attained amid a high level of uncertainty, which has adversely affected the sentiment for purchasing residential estates. It also comes in the wake of a general wave of price hikes locally and globally in the past few months, which can be seen when comparing the index with its corresponding level, as it is higher by around 2.2%.
Figure 1: Residential Property Price index in Palestine (point)
Source: PMA (July 2022), Residential property price index in Palestine. Second quarter 2022.
2018 Q1 =100.
The specification of the residential property plays a key role in determining its price, where the apartments for sale in Palestine during 2022Q2 are characterized by the fact that about 60% of them are new that have not been inhabited yet. The average area of the apartment is about 150 m2, and it mostly contains three bedrooms and at most two bathrooms, in addition to a balcony. Meanwhile, the average area of the house is about 250 m2. Most of the houses for sale are new and consist of more than three bedrooms and at least three bathrooms. The prices of residential properties are affected by other factors besides the abovementioned, headed by the price of the land on which the property is located, in addition to the geographical location and neighborhood.
In the same context, it is important to mention that the PMA issuing this index aims at monitoring the real-estate market and its price fluctuations in order to avoid possible price bubbles. Moreover, it uses this index as input for economic policies, especially macroprudential policies, taking into account their important influence on individual decisions of consumption, savings, and investment.
Table 1: Residential Property Price index in Palestine (point)
|
Period
|
Apartments
|
Houses
|
Overall
|
|
Index
|
Percent change (%, q o q)
|
Index
|
Percent change (%, q o q)
|
Index
|
Percent change (%, q o q)
|
|
2020
|
Q1
|
94.9
|
-1.6
|
108.9
|
0.9
|
103.3
|
-0.1
|
|
Q2
|
97.2
|
2.4
|
113.1
|
3.9
|
106.7
|
3.4
|
|
Q3
|
96.8
|
-0.4
|
93.3
|
-17.6
|
94.7
|
-11.3
|
|
Q4
|
97.2
|
0.4
|
103.6
|
11.1
|
101.0
|
6.7
|
|
2021
|
Q1
|
103.4
|
6.4
|
105.6
|
1.9
|
104.7
|
3.7
|
|
Q2
|
104.5
|
1.1
|
114.4
|
8.4
|
110.4
|
5.5
|
|
Q3
|
105.4
|
0.8
|
109.7
|
-4.1
|
107.9
|
-2.3
|
|
Q4
|
103.7
|
-1.6
|
111.0
|
1.2
|
108.0
|
0.1
|
|
2022
|
Q1
|
107.0
|
3.2
|
117.5
|
5.8
|
113.2
|
5.8
|
|
Q2
|
106.5
|
-0.5
|
117.2
|
-0.3
|
112.9
|
-0.3
|
Source: PMA (July 2022), Residential property price index in Palestine. Second quarter 2022.
2018 Q1 =100.
[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.
2267