Changes in the share of first home buyers among young people, based on income level
Changes in the share of first home buyers among young people, based on
- The share of first home buyers among employed people aged 25–35 for all income levels increased between 2007 and 2016.
- The correlation between household income and the probability of young people aged 25–35 purchasing a first home was stronger in 2015–16 than in the years prior to the accelerated increase of housing prices in 2007–08.
Research written by Vicky Rubashevski-Banit of the Bank of Israel Research Department, and that will be published in the upcoming “Selected Research and Policy Analysis Notes” analyzes the changes in the share of first home buyers among young people, based on income level. The analysis is based on processing detailed data files of people carrying out housing transaction and annual income files of employees in the economy. The analysis indicates that the share of first home buyers among employed people aged 25–35 out of employees in the same age cohort that did not own a home, increased from approximately 2 percent a year in 2007 and 2008 to a level of 4 percent in 2015 and 2016 (Figure 1). However, it is important to note that the increase in the share of first home buyers identified in the data does not reflect a decline in the economic burden on young households, as this development was made possible by, among other things, the extending of the repayment period of the mortgage and was likely also accompanied by compromising on the features of the homes purchased. Although in 2011 and 2014 a temporary decline was observed in the share of young first home buyers due to the social protests of 2011 and the period in 2014 of waiting for the implementation of the Zero VAT plan, which ultimately did not go into effect, the scope of purchases increased sharply after those periods.