<PAGE>


                                 SECURITIES AND EXCHANGE COMMISSION
                                      WASHINGTON, DC 20549

                                           -------------

                                             FORM 10-Q


  (Mark One)

   X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
  --- EXCHANGE ACT OF 1934

  For the quarterly period ended June 30, 1997 OR

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
  --- EXCHANGE ACT OF 1934
      
  For the transition period from                         to                   
                                 ------------------------  -------------------
                                      Commission file number 0-12138

  New England Realty Associates Limited Partnership
  (Exact Name of Registrant as Specified in Its Charter)

  Massachusetts                                      04-2619298
  (State or Other Jurisdiction of        (I.R.S. Employer Identification No.)
   Incorporation or Organization)

  39 Brighton Avenue, Allston, Massachusetts            02134
  (Address of Principal Executive Offices)            (Zip Code)

  Registrant's Telephone Number, Including Area Code          (617)783-0039

  Not Applicable
  (Former Name, Former Address and Former Fiscal Year, if Changed Since Last 
   Report)


     Indicate by check /X/ whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days. Yes    X        No
                                                  ----------     ---------

<PAGE>

                                   INDEX

                       PART I-FINANCIAL INFORMATION

                                                                  Page No.
Item 1.                 Financial Statements

                        Balance Sheets-June 30, 1997
                        and June 30, 1996                             1

                        Statements of Operations-Six Months
                        Ended June 30, 1997 and June 30, 1996         2

                        Statements of Cash Flows-Six Months
                        Ended June 30, 1997 and June 30, 1996         3

                        Notes to Financial Statements                 6

Item 2.                 Management's Discussion and Analysis of
                        Financial Condition and Results of 
                        Operations                                   13

                  PART II - OTHER INFROMATION

Item 5.                 Other Information

SIGNATURES                                                           ----


                                       i
f<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

                                                        June 30,     December 31
                                                          1997           1996
                                                      (Unaudited)
                                                      -----------    -----------
ASSETS

Rental Properties...................................  $51,792,397    $52,293,981
Cash and Cash Equivalents...........................    2,099,831      1,830,605
Short-term Investments..............................           --         51,528
Rents Receivable....................................      588,141        688,245
Real Estate Tax Escrows.............................      528,878        503,234
Prepaid Expenses and Other Assets...................    1,539,773      1,696,237
Investment in Joint Ventura.........................       82,699         93,734
Financing and Leasing Fees..........................    1,462,879      1,631,375
                                                      -----------    -----------


  TOTAL ASSETS                                        $58,094,598    $58,788,939
                                                      -----------    -----------
                                                      -----------    -----------

LIABILITIES AND PARTNERS' CAPITAL

Mortgages Payable...................................  $52,253,949    $52,538,499
Accounts Payable and Accrued Expenses...............      650,002        684,626
Advance Rental Payments and Security Deposits.......    1,733,678      1,667,316
                                                      -----------    -----------
  Total Liabilities.................................   54,637,629     54,890,441

Commitments and Contingent
  Liabilities (Note 9)

Partners' Capital:
  173,957 units outstanding in 1997
    and 175,163 in 1996.............................    3,456,969      3,898,498
                                                      -----------    -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL.............  $58,094,598    $58,788,939
                                                      -----------    -----------
                                                      -----------    -----------


See notes to consolidated financial statements.


                                     1
<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                        Three Months Ended           Six Months Ended
                                             June 30,                     June 30,
                                        1997          1996           1997        1996
                                            (Unaudited)                 (Unaudited)
                                     ------------------------    ------------------------

<S>                                 <C>          <C>            <C>          <C>

Revenues:
 Rental income...............        $ 4,218,240  $ 4,138,699    $ 8,438,494  $ 8,314,114
 Laundry & sundry income.....             40,867       47,972         93,443      109,021
                                     -----------  -----------    -----------  -----------
                                       4,259,107    4,187,671      8,531,937    8,423,135
                                     -----------  -----------    -----------  -----------
Expenses:
 Administrative..............            275,774      229,642        524,533      399,785
 Depreciation and
  amortization...............            793,015      682,821      1,584,817    1,373,787
 Interest....................          1,165,602    1,212,447      2,329,178    2,379,609
 Management fees.............            179,092      172,609        366,100      353,021
 Operating...................            418,149      409,547      1,046,674    1,061,129
 Renting.....................             36,079       47,276         75,016       62,209
 Repairs & maintenance.......            623,097      685,896      1,211,387    1,232,609
 Taxes & insurance...........            474,718      464,732        932,344      924,551
                                     -----------  -----------    -----------  -----------
                                       3,965,526    3,904,970      8,070,049    7,786,700
                                     -----------  -----------    -----------  -----------
Income from
 Operations..................            293,581      282,701        461,888      636,435
                                     -----------  -----------    -----------  -----------
Other income (loss):
 Interest income.............             32,884       35,294         61,216       88,344
 Income (loss) from
  investment in
  partnership and
  joint venture..............             (7,146)       5,228         (6,181)      11,535
                                     -----------  -----------    -----------  -----------
                                          25,738       40,522         55,035       99,879
                                     -----------  -----------    -----------  -----------
Net Income...................        $   319,319  $   323,223    $   516,923  $   736,314
                                     -----------  -----------    -----------  -----------
                                     -----------  -----------    -----------  -----------

Net Income
 per Unit....................        $      1.83  $      1.82    $      2.96  $      4.16
                                     -----------  -----------    -----------  -----------
                                     -----------  -----------    -----------  -----------
Weighted Average Number
 of Units Outstanding........            174,020      177,152        174,325      177,152
                                     -----------  -----------    -----------  -----------
                                     -----------  -----------    -----------  -----------
</TABLE>



See notes to consolidated financial statements.

                                     2

<PAGE>


NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                       Six Months Ended
                                                           June 30,
                                                         (Unaudited)
                                                   1997               1996
                                                ----------         ----------

Cash Flows from Operating Activities:
  Net income.................................   $  516,923         $  736,314
                                                ----------         ----------

  Adjustments to reconcile net income to
    net cash provided by (used in)
    operating activities:
     Depreciation and amortization...........    1,584,817          1,373,787
     (Income) loss from investments in
       partnerships and joint venture........        6,181            (11,535)
     (Increase) Decrease in rents
       receivable............................      100,104            (69,481)
     (Increase) in financing and 
       leasing fees..........................       (9,837)           (26,255)
     Increase (Decrease) in accounts payable
       and accrued expenses..................      (34,624)          (151,411)
     (Increase) Decrease in real estate
       tax escrows...........................      (25,644)            64,004
     Decrease in prepaid expenses and
       other assets..........................      156,464             69,597
     Increase (Decrease) in advance rental
       payments and security deposits........       66,362             15,636
                                                ----------         ----------
     Total Adjustments.......................    1,843,823          1,264,342
                                                ----------         ----------
     Net cash provided by
       operating activities..................    2,360,746          2,000,656
                                                ----------         ----------

Cash Flows from Investing Activities:
  Distribution from joint venture............        4,854             24,048
  Payment for purchase and improvement
    of rental properties.....................     (904,900)          (619,624)
  Maturity of short-term investments.........       51,528               --
  Purchase of short-term investments.........         --               (1,337)
                                                ----------         ----------
Net cash (used in) investing activities......     (848,518)          (596,913)
                                                ----------         ----------


See notes to consolidated financial statements.

                                     3
<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                          Six Months Ended
                                                              June 30,
                                                            (Unaudited)
                                                         1997         1996
                                                     ----------   ----------

Cash Flows from Financing Activities:
  Principal payments and early repayment of
    mortgages payable...............................   (284,550)    (261,027)
  Distributions to partners.........................   (853,222)    (601,366)
  Purchase of treasury units........................   (105,230)        --
                                                     ----------   ----------

    Net cash (used in) financing activities......... (1,243,002)    (862,393)
                                                     ----------   ----------

Net Increase in Cash and Cash Equivalents...........    269,226      541,350

Cash and Cash Equivalents, Beginning................  1,830,605    2,706,124
                                                     ----------   ----------

Cash and Cash Equivalents, Ending................... $2,099,831   $3,247,474
                                                     ----------   ----------
                                                     ----------   ----------


See notes to consolidated financial statements.

                                     4
<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL

(Unaudited)


                                                Partners' Capital
                                  --------------------------------------------
                                          Limited         General
                                  ---------------------  --------
                                    Class A    Class B    Class C     Total
                                  ----------  ---------  --------  -----------


Balance, January 1, 1996......... $3,455,787  $ 824,206  $ 43,409  $ 4,323,402

Distributions to Partners........   (481,093)  (114,260)   (6,013)    (601,366)

Net Income.......................    589,051    139,900     7,363      736,314
                                  ----------  ---------  --------  -----------

Balance, June 30, 1996........... $3,563,745  $ 849,846  $ 44,759  $ 4,458,350
                                  ----------  ---------  --------  -----------
                                  ----------  ---------  --------  -----------

Units authorized and issued,
  net of 3,073 Treasury Units,
  at June 30, 1996...............    141,722     33,659     1,771      177,152
                                  ----------  ---------  --------  -----------
                                  ----------  ---------  --------  -----------
Balance, January 1, 1997......... $3,115,865  $ 743,473  $ 39,160  $ 3,898,498

Unit Buyback.....................    (84,184)   (19,994)   (1,052)    (105,230)

Distributions to Partners........   (682,578)  (162,112)   (8,532)    (853,222)

Net Income.......................    413,538     98,215     5,170      516,923
                                  ----------  ---------  --------  -----------
Balance, June 30, 1997........... $2,762,641  $ 659,582  $ 34,746  $ 3,456,969
                                  ----------  ---------  --------  -----------
                                  ----------  ---------  --------  -----------
Units authorized and issued, 
  net of 6,268 Treasury Units
  at June 30, 1997...............    139,063     33,148     1,746      173,957
                                  ----------  ---------  --------  -----------
                                  ----------  ---------  --------  -----------


See notes to consolidated financial statements.

                                     5
<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES

Line of Business: New England Realty Associates Limited Partnership ("NERA" 
or the "Partnership") was organized in Massachusetts during 1977. NERA and 
its subsidiaries own and operate various residential apartment buildings, 
condominium units, and commercial properties located in Massachusetts, 
Connecticut, New Hampshire, and Maine.  NERA has an investment in a real 
estate partnership and a joint venture.  In connection with the mortgages 
referred to in Note 5, a substantial number of NERA's properties were 
restructured into separate subsidiary limited partnerships.  The financial 
statements for prior periods are unchanged.

Principles of Consolidation:  The consolidated financial statements include 
the accounts of NERA and its subsidiary limited partnerships. NERA has a 
99.67% ownership interest in each of such subsidiary limited partnerships.  
The consolidated group is referred to as the "Partnerships." Minority 
interests are not recorded since they are insignificant.  All significant 
intercompany accounts and transactions are eliminated in consolidation.  The 
Partnership accounts for its investment in the joint venture on the equity 
method.

Accounting Estimates: The preparation of the financial statements is in 
accordance with generally accepted accounting principles (GAAP) requiring 
management to make estimates and assumptions that affect the reported amounts 
of assets and liabilities and disclosures of contingent assets and 
liabilities at the date of the financial statements and the reported amounts 
of revenues and expenses during the reported period.  Accordingly, actual 
results could differ from those estimates.

Revenue Recognition: Certain leases of the commercial properties provide for 
increasing stepped minimum rents, which are accounted for on a straight-line 
basis over the term of the lease.

Rental Properties: Rental properties are stated at cost less accumulated 
depreciation. Maintenance and repairs are charged to expense as incurred; 
improvements and additions are capitalized. When assets are retired or 
otherwise disposed of, the cost of the asset and related accumulated 
depreciation is eliminated from the accounts, and any gain or loss on such 
disposition is included in income. Rental properties are depreciated on the 
straight-line method over their estimated useful lives. In the event that 
facts and circumstances indicate that the carrying value of rental properties 
may be impaired, an analysis of recoverability is performed. The estimated 
future undiscounted cash flows are compared to the asset's carrying value to 
determine if a write-down to fair value or discounted cash flow value is 
required.  This policy was adopted in 1995.  Previously, impairment was 
considered on a case-by-case basis.

Financing and Leasing Fees: Financing fees are capitalized and amortized, 
using the interest method, over the life of the related mortgages.  Leasing 
fees are capitalized and amortized on a straight-line basis over the life of 
the related lease.

                                     6
<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes: The financial statements have been prepared under the basis 
that NERA and its subsidiaries are entitled to tax treatment as partnerships. 
Accordingly, no provision for income taxes on income has been recorded.

Cash Equivalents: The Partnerships consider cash equivalents to be all highly 
liquid instruments purchased with a maturity of three months or less.

Short-term Investments: The Partnerships consider short-term investments to 
be any bank certificates of deposit, Treasury obligations, or commercial 
paper with initial maturities between three and twelve months. These 
investments are considered to be trading account securities and are carried 
at fair value.

Concentration of Credit Risks and Financial Instruments: The Partnerships' 
tenants are located in New England, and the Partnerships are subject to the 
general economic risks related thereto. No single tenant accounted for more 
than 5% of the Partnerships' revenues in 1997, 1996, or 1995. The 
Partnerships make their temporary cash investments with high credit quality 
financial institutions or purchase money market accounts invested in U.S. 
Government securities. At June 30, 1997, approximately $1,694,000 of cash and 
cash equivalents exceeded federally insured amounts of which approximately 
$1,668,000 was held in a money market fund invested in U.S. Government 
securities.

NOTE 2--RENTAL PROPERTIES

Rental properties consist of the following:
<TABLE>
<CAPTION>
                               June 30,         December 31,         Useful
                                 1997              1996               Life
                                                                           
                             ------------       ------------       -----------
<S>                          <C>                <C>                <C>

Land                         $  9,710,733       $  9,710,733          --
Buildings                      43,622,868         43,622,868       25-31 years
Building improvements          11,116,719         10,648,403       15-31 years
Kitchen cabinets                1,101,256            940,870        5-10 years
Carpets                         1,117,216            977,574        5-10 years
Air conditioning                  249,338            233,995        7-10 years
Land improvements                 599,909            599,909       10-31 years
Laundry equipment                  50,236             45,248         5-7 years
Elevators                          16,842             16,842          20 years
Swimming pools                     42,450             42,450          10 years
Equipment                         384,291            311,809         5-7 years
Motor vehicles                     49,852             49,852           5 years
Fences                             20,785             20,785        5-10 years
Furniture and fixtures            244,165            201,638         5-7 years
Smoke alarms                        7,441              6,224         5-7 years
                             ------------       ------------
                               68,334,101         67,429,200
Less accumulated
 depreciation                  16,541,704         15,135,219
                             ------------       ------------
                             $ 51,792,397       $ 52,293,981
                             ------------       ------------
                             ------------       ------------

</TABLE>

                                     7
<PAGE>


NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2--RENTAL PROPERTIES (CONTINUED)

On December 11, 1996, the Partnership acquired a residential complex 
containing 36 apartment units in Lowell, Massachusetts for a purchase price 
of approximately $790,000. The purchase was paid from the Partnership's cash 
reserves and is unencumbered.

NOTE 3--RELATED PARTY TRANSACTIONS

The Partnerships' properties are managed by an entity which is owned by the 
majority shareholder of the General Partner. The management fee is equal to 
4% of rental revenue and laundry income. Total fees paid were $366,100, and 
$353,021 for the six months ended June 30, 1997 and 1996, respectively. 
Advance rental payments and security deposits are held in escrow by the 
management company (see Note 6). The management company also receives a 
mortgage servicing fee equal to an annual rate of 1/2% of the monthly 
outstanding balance of mortgages receivable resulting from the sale of 
property. There were no mortgage servicing fees paid in 1997 and 1996.

The Partnership Agreement also permits the General Partner or a management 
company to charge the costs of professional services (such as counsel, 
accountants, and contractors) to NERA. During the six months ended June 30, 
1997 and 1996 approximately $213,000 and $142,000 was charged to NERA for 
legal, maintenance, architectural services and supervision of capital 
improvements. Approximately $64,000, and $40,000 was capitalized during the 
six months ended June 30, 1997 and 1996, in leasehold improvements and the 
balance was included in administrative expense and repairs and maintenance 
expenses. In addition, the Partnership paid to the management company $25,000 
in each of the six months ended June 30, 1997 and 1996 for accounting 
services previously provided by an outside company.

The Partnership Agreement entitles the General Partner or a management 
company to receive certain commissions upon the sale of Partnership property 
only to the extent that total commissions do not exceed 3%. No such 
commissions were paid in 1997 or 1996.

In 1997 and 1996, an unrelated individual that performed asset management 
consulting services to NERA and the management company was appointed 
President of the management company. This individual continues to receive 
asset management fees from NERA, receiving $18,900 during the six months 
ended June 30, 1997 and $28,800 during the year ended December 31, 1996.

Included in prepaid expenses and other assets were amounts due from related 
parties of $445,838 at June 30, 1997 and $416,317 at December 31, 1996 
representing Massachusetts tenant security and prepaid rent deposits, which 
are held for the Partnerships by another entity also owned by one of the 
shareholders of the General Partner (see Note 6).

Also included in prepaid expenses and other assets is an insurance reserve 
account funded by the Partnerships and held by the management company. The 
insurance reserve includes funds from other properties which are also owned 
by the related parties. The balance in the reserve was $151,901 at June 30, 
1997 and $82,856 at December 31, 1996.

                                     8

<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3--RELATED PARTY TRANSACTIONS (CONTINUED)

See Note 10 for rental arrangements with the Timpany Plaza joint venture. 

As described in Note 4, the Partnership has interests in certain entities in 
which the majority shareholder of the General Partner is also involved. 

NOTE 4--OTHER ASSETS

The short-term investment $51,528 at December 31, 1996, is carried at cost, 
which approximates fair value. Such investment is a 5.07% certificate of 
deposit at Citizens Bank which matured in February 1997.

Included in prepaid expenses and other assets at June 30, 1997 and December 
31, 1996 is approximately $431,000 and $669,000 held in escrow to pay future 
capital improvements. Additional payments of approximately $34,000 are paid 
monthly. As the improvements are made, funds are used from these escrow 
accounts.

The carrying value of the Partnership's 50% interest in the Timpany Plaza 
joint venture, at equity, is $82,699 at June 30, 1997 and $93,734 at 
December 31, 1996.

The Partnership owns a 10% ownership interest in a real estate limited 
partnership which is accounted for by the equity method and reduced to a 
carrying value of zero. The loss in excess of cost in this limited 
partnership has not been recorded as the Partnership is not liable for such 
amounts. In 1996, $18,360 was recorded in other income for the amount 
received from the disposition of limited partnership investment that had 
previously been reduced to a carrying value of zero.

The majority shareholder of the General Partner is also the majority owner of 
this real estate limited partnership. There can be no assurance that any of 
NERA's partnership investments will be realizable in the future in excess of 
their carrying value.

NOTE 5--MORTGAGES PAYABLE

At June 30, 1997 and December 31, 1996, the mortgages payable consisted of 
various loans, substantially all of which were secured by first mortgages on 
properties referred to in Note 2, with interest ranging from 8.25% to 10.99% 
payable in monthly installments currently aggregating approximately $431,000 
including interest, to various dates through 2005. Although the loans mature 
within ten years, they are being amortized on a basis between 25 and 27.5 
years. The carrying amounts of the Partnerships' mortgage payable approximate 
their fair value.


                                     9
<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5--MORTGAGES PAYABLE (CONTINUED)

The Partnerships have pledged tenant leases as additional collateral for 
certain of these mortgages.

Approximate annual maturities are as follows:

        1998 - current maturities........  $   607,400
        1999 ............................      662,335
        2000 ............................    7,340,075
        2001 ............................      711,932
        2002 ............................      774,562
        Thereafter.......................   42,157,645
                                            ----------
                                           $52,253,949
                                           -----------
                                           -----------

NOTE 6--ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS

The lease agreements for certain properties require tenants to maintain a 
one-month advance rental payment plus security deposits. The funds are held 
in escrow by another entity owned by the majority shareholder of the General 
Partner (see Note 3).

NOTE 7--PARTNERS' CAPITAL

The Partnership has two categories of limited partners (Class A and B) and one 
category of General Partner (General Partner). Under the terms of the 
Partnership Agreement, Class B units and General Partnership units must 
represent 19% and 1% respectively of the total units outstanding. All classes 
have equal profit-sharing and distribution rights in proportion to their 
ownership interests.

In March 1997, the Partnership declared a regular semi annual dividend of 
$3.90 and a special distribution of $1.00 per unit. In March 1996, the 
Partnership declared a distribution of $3.40 per unit.

The Partnership has entered into a deposit agreement with an agent to 
facilitate public trading of limited partners' interest in Class A units.

Under the terms of this agreement, the holders of Class A units have the 
right to exchange each Class A unit for ten Depositary Receipts. The 
following is information on the net income per Depositary Receipt:

                                              Six Months Ended
                                                  June 30,
                                               1997     1996
                                              -------  -------
        Net Income per Depository Receipt     $   .30  $   .42
                                              -------  -------
                                              -------  -------

                                     10

<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8--CAPITAL UNIT REPURCHASE PLAN

During the second quarter of 1996, the Partnership announced a plan to 
repurchase up to $500,000 of its Depositary Receipts from existing holders of 
securities. The repurchase of Depositary Receipts may take place over a 
period of a year or more. The purchase price would be equal to the price at 
which such securities are traded on the Nasdaq Stock market at the time of 
the repurchase. In January 1997, the Partnership repurchased 6,048 depository 
receipts for a total cost of $53,586 and repurchased Class B and General 
Partnership units for a total cost of $13,397. In April 1997, the Partnership 
repurchased 3600 depository receipts for a total cost of $30,600 and 
repurchased Class B and General Partnership units for a total cost of 
$21,044. During the third and fourth quarters of 1996, the Partnership 
repurchased 15,915 depository receipts for a total cost of $110,060 and 
repurchased Class B and General Partnership units for a total cost of $27,517. 
The Class B and General Partnership units were repurchased to maintain the 
required ownership percentage (See Note 7).

Treasury units at June 30, 1997 are as follows:

     Class A           5,117
     Class B           1,095
     General Partner      56
                      ------
                       6,268
                      ------
                      ------

NOTE 9--COMMITMENTS AND CONTINGENCIES

From time to time, the Partnerships are involved in various ordinary routine 
litigation incidental to their business. The Partnerships are not involved in 
any material pending legal proceedings.

NOTE 10--RENTAL INCOME

During the six months ended June 30, 1997, approximately 85% of rental income 
is related to residential apartments and condominium units with leases of one 
year or less. The remaining 15% is related to commercial properties which 
have minimum future rental income on noncancellable operating leases as 
follows: 

                        Commercial
                         Property
                          Leases             Land Leases            Total


1998..........          $1,493,790             $146,667          $1,640,457
1999..........           1,115,981              146,667           1,262,648
2000..........             882,400              146,667           1,029,067
2001..........             579,653              146,667             726,320
2002..........             383,642              146,667             530,309
Thereafter....           1,210,660            1,026,669           2,237,329

                       -----------          -----------         -----------
                        $5,666,126           $1,760,004          $7,426,130
                       -----------          -----------         -----------
                       -----------          -----------         -----------


                                     11
<PAGE>

NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10--RENTAL INCOME (CONTINUED)

In August 1988, the Partnership entered into a land lease agreement with an 
existing tenant of the Timpany Plaza Shopping Center in Gardner, 
Massachusetts.  As part of this lease, the tenant, at its cost, demolished 
approximately one-third of the mall and replaced it with a new store of 
comparable size.  The minimum fixed term of this lease is for 20 years, which 
commenced with the opening of the new store in December 1989.

The minimum annual rents are $110,000 per year for the first five years, 
increasing each subsequent five-year period, with the average being $137,500 
per year for the minimum twenty-year term.  Included in rents receivable at 
June 30, 1997 and December 1996 is $167,000 and $163,000 respectively, 
representing the deferred rental income from this lease.  There are also 
contingent rents based upon sales volume, common area maintenance, and other 
charges.  This lease also provides for six extension periods of five years 
each at increased rents.  The minimum rents pertaining to this agreement are 
reflected in the foregoing table.

The ownership of this building addition transfers to the Partnership at the 
termination of the lease.  Accordingly, the Partnership included in property 
assets approximately $1,400,000 of book value of the demolished building 
allocable to the Partnership leasehold interest and is depreciating this 
amount on a straight-line basis over a twenty-year period.

Concurrently, the Partnership entered into a joint venture with this same 
tenant relating to the space formerly leased by the tenant.  Under this 
arrangement, the two parties have agreed to relet the space and divide the 
net income or loss after paying to the Partnership an annual minimum rent of 
$84,546.  The Partnership's share of the loss was $6,181 for the six months 
ended June 30, 1997 compared to income of $11,500 for the six months ended 
June 30, 1996.

The aggregate minimum future rental income does not include contingent 
rentals which may be received under various leases in connection with 
percentage rents, common area charges, and real estate taxes.  Aggregate 
contingent rentals were approximately $435,000, and $486,000 for the six 
months ended June 30, 1997 and 1996 respectively.

NOTE 11--CASH FLOW INFORMATION

During the six months ended June 30, 1997 and 1996, cash paid for interest on 
debt was $2,304,252 and $2,327,771 respectively.

NOTE 12--FAIR VALUE OF FINANCIAL INSTRUMENTS

The Partnership considers the fair value of its financial instruments to 
approximate their carrying values because conditions pertaining to the 
historic carrying values approximate those in the current market.


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<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operation

Results of Operations

Income from operations for the second quarter of 1997 was approximately 
$294,000, compared to approximately $283,000 for the same period in 1996, an 
increase of approximately $11,000.  For the six months ended June 30, 1997, 
income from operations was approximately $462,000 compared to approximately 
$636,000 for the same period in 1996, a decrease of approximately $174,000.  
Net cash provided by operations during the six months ended June 30, 1997 was 
approximately $2,361,000 compared to approximately $2,001,000 during the same 
period in 1996, an increase of approximately $360,000. This increase in cash 
provided from operations is the result of a decrease in rents receivable; a 
decrease in prepaid expenses and other assets due to the Partnerships use of 
funds previously held in escrow; and an increase in advance rental 
payments and security deposits related to a higher occupancy level at the 
Partnerships residential properties.

Rental income during the second quarter of 1997 was approximately $4,218,000 
compared with approximately $4,140,000, for the same period in 1996, an 
increase of approximately $78,000.  For the six months ended June 30,1997, 
rental income was approximately $8,438,000 compared with approximately 
$8,314,000 for the same period in 1996, an increase of approximately 
$124,000.  This increase in rental income is due to increased rental rates at 
the residential properties.  The increase in rental income at the residential 
properties is offset by a decrease in rental income from the commercial 
properties, primarily the Timpany Plaza Shopping Center.  A major tenant 
filed for bankruptcy under Chapter 11 in March 1996.  This tenant previously 
occupied 67,000 square feet, and the annual rent paid by this tenant was 
approximately $347,000.  At June 30, 1997, the space remains vacant, however, 
the Partnership plans to sub-divide the space to make it more marketable. 

Expenses for the second quarter of 1997 were approximately $3,966,000 
compared to approximately $3,905,000 for the same period in 1996, an increase 
of approximately $61,000.  This increase reflects an increase in depreciation 
and amortization of approximately $110,000 due to the acquisition of a 
residential apartment building in November 1996 as well as depreciation on 
the ongoing capital improvements being made to properties; an increase in 
taxes and insurance of approximately $10,000 due to higher real estate taxes; 
and an increase in the management fee of approximately $7,000 due to higher 
rental income.  These 

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<PAGE>

increases are offset by a decrease in interest expenses of approximately 
$47,000 due to a drop in the level of debt, and a decrease in repairs and 
maintenance expenses of approximately $63,000 due to significant improvements 
made to properties in 1996.

Expenses for the first six months of 1997 were approximately $8,070,000 
compared with approximately $7,787,000 for the same period in 1996, an 
increase of approximately $283,000. This change represents an increase in 
administrative expenses of approximately $125,000 related primarily to 
staffing level increases as well as increased legal and accounting fees. The 
Partnership does not anticipate continued increases in staffing levels in 
the near term. Depreciation and amortization increased approximately 
$211,000; and the management fee has increased approximately $13,000. The 
reason for these increases are discussed in the preceding paragraph.

Interest income for the three months ended June 30, 1997 was approximately 
$33,000, compared to approximately $35,000 for the same period in 1996, a 
decrease of approximately $2,000.  Interest income for the six months ended 
June 30, 1997 was approximately $61,000, compared to approximately $88,000 
for the same period in 1996, a decrease of approximately $27,000.  The 
decrease in interest income for the six months is due to the receipt of 
$19,790 during the first quarter of 1996 of interest on the funds 
previously held in escrow. 

The Partnership is a partner in a joint venture with a tenant at the Timpany 
Plaza Shopping Center in Gardner, Massachusetts.  Under the terms of the 
agreement, the parties have agreed to relet the space and divide the net 
income or loss after paying to the Partnership an annual minimum rent of 
approximately $84,000.  The Partnership's investment in the Timpany Plaza 
joint venture represents less than 1% of NERA's assets.

The Partnership's share of loss in the joint venture at the Timpany Plaza 
Shopping Center was approximately $7,000 for the second quarter of 1997 
compared to income of approximately $5,000 for the second quarter of 1996, a 
decrease of approximately $12,000.  For the six months ended June 30, 
1997, the Partnership's share of loss from the joint venture at Timpany Plaza 
Shopping Center was approximately $6,000 compared to income of approximately 
$12,000 for the same period in 1996, a decrease of approximately $18,000.  
This represents a decrease in rental income due to lower rental rates 
negotiated with the tenants due to the high vacancy level at the Timpany 
Plaza Shopping Center.

As a result of the changes discussed above, net income for the three months 
ended June 30, 1997 was $319,319 compared to $323,223 for the same period in 
1996, a decrease of $3,904 and net income for the six months ended June 30, 
1997 was $516,923 compared to $736,314 for the same period in 1996, a 
decrease of $219,391.


                                     14
<PAGE>

Liquidity and Capital Resources

The Partnership's principal source of cash during 1997 and 1996 has been the 
collection of rents.  The majority of cash and cash equivalents of $2,099,831 
at June 30, 1997 and $1,830,605 at December 31, 1996 is invested in a U.S. 
government money market account.  Additionally, the Partnership purchased a 
short term investment valued at $51,528 at December 31, 1996.  This 
investment is a certificate of deposit which matured in February 1997.

In November 1996, the Partnership and its subsidiaries acquired a residential 
complex consisting of 36 apartments in Lowell, Massachusetts.  The total 
purchase price of this property was approximately $790,000, and was funded 
from the Partnership's cash reserves 

In 1996, the Partnership announced a plan under which it may repurchase up to 
$500,000 of its Depositary Receipts from existing holders of securities.  The 
repurchase plan may take place over a period of one year or more.  The 
purchase price will be equal to the price at which such securities are traded 
on the Nasdaq Stock Market at the time of their purchase.  In 1997, the 
Partnership repurchased 9,648 depositary receipts for a total purchase price 
of $84,186,and purchased Class B and General Partnership units for a total 
cost of $21,044.  During the second and third quarters of 1996, the 
Partnership purchased 15,915 depositary receipts for a total cost of $110,060 
and Class B and General Partnership units for a total cost of $27,517. The 
Class B and General Partnership units are purchased to maintain the required 
ownership percentages.

During the second quarter of 1997, the Partnership completed approximately 
$394,000 of capital improvements to its properties.  These improvements were 
funded from escrow accounts previously established for this purpose and from 
cash reserves.  The most significant improvements were made at the apartments 
located at the Courtyard Apartments on North Beacon in Brighton, 
Massachusetts for a total cost of approximately $154,000.  Significant 
improvements were also made at Westgate Woburn Apartments in Woburn, 
Massachusetts for a total cost of approximately $30,000, as well as 
improvements of approximately $24,000 at the Redwood Hills Apartments in 
Worcester, Massachusetts; approximately $25,000 at the Highland Street 
apartments located in Lowell, Massachusetts; and approximately $17,000 at the 
Apartments at 1144 Commonwealth Avenue in Brighton, Massachusetts.  

In keeping with its five year capital improvement program,the Partnership and 
its Subsidiary partnerships plan to invest an additional $1,200,000 in 
capital improvements in 1997, of which $965,000 is designated for residential 
properties and $235,000 is designated for commercial properties.  These 
improvements will be funded from cash reserves and escrow accounts.  

                                     15
<PAGE>

The Partnership anticipates that available cash and interest bearing 
investments, collection of rents, and proceeds from the sale and refinancing 
of Partnership properties will be sufficient to finance current improvements 
to its properties.  The Partnership's net income and cash flow may fluctuate 
dramatically from year to year as a result of the sale of properties, 
unanticipated increases in expenses, or a loss of a significant tenant.

Since the Partnership's long term goals include the acquisition of additional 
properties, a portion of the proceeds from the refinancing and sale of 
properties is reserved for this purpose.  The Partnership will consider 
refinancing existing properties if either insufficient funds exist from cash 
reserves to repay existing mortgages or if funds required for future 
acquisitions are not available.

The Partnership paid a distribution of $3.90 per Partnership unit ($0.39 per 
depositary receipt) and a special distribution of $1.00 per unit ($0.10 per 
depositary receipt) during the six months ended June 30, 1997 and $3.40 
($0.34 per depositary receipt)during the six months ended June 30, 1996.

Factors that may affect future results

The discussion above contains information based on management's belief and 
forward looking statements that involve a number of risks, uncertainties and 
assumptions.  There can be no assurances that actual results will not differ 
materially as a result of various factors, including but not limited to the 
following:

The Timpany Plaza Shopping Center in Gardner, Massachusetts is 47% vacant at 
July 15, 1997.  If the space remains unoccupied, the 1997 rental income will 
be approximately $200,000 less than 1996.  Should circumstances remain 
unchanged, the Partnership may need to review the carrying value of this 
property for impairment in accordance with the Statement of Financial 
Accounting Standards No. 121 (Fas No.121).

A major tenant of the Mall in Lewiston, Maine, which paid approximately 
$240,000 in 1996, can terminate its lease with nine months notice effective 
January 1, 1997. The Partnership is currently negotiating to obtain a 
long-term lease.  The Partnership, at this time, cannot make any assurances 
that the tenant will renew its lease for this space.


                                     16
<PAGE>

                               SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

Date:  August 14, 1997


                                       NEW ENGLAND REALTY ASSOCIATES
                                       LIMITED PARTNERSHIP

                                       By:    NEWREAL, INC.,
                                              its General Partner*

                                       By: /s/ Ronald Brown
                                          -------------------------
                                          Ronald Brown, President

                                       *Functional equivalent of Chief
                                        Executive Officer, Principal
                                        Financial Officer and Principal
                                        Accounting Officer
















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