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Housing Prices in Israel Grow Non-Stop

November 19, 2021
21

The Finance Minister promises that the government will reduce the gap between supply and demand within 3-4 years.

Data from the Central Bureau of Statistics (CSI) showed that housing prices have increased by 9.9% over the past year. And over the past decade, real estate in the country has risen in price by 346%. At the same time, Finance Minister Avigdor Lieberman predicts that by the end of 2021 it will increase in price even more.

The minister has said that there are five factors influencing the price increase. Two of them are the key interest rate and shipping costs, and both are beyond the government's control. The other three - demand, supply and planning - are sectors in which, according to him, public policy "broke records this year."

Lieberman also noted that with the approval of the state budget earlier this month, the gap between supply and demand in the real estate market will be eliminated "within three to four years."

CSI data showed that prices did not rise in all areas in September compared to August, falling in Tel Aviv (-0.3%) and Jerusalem (-0.1%). The strongest growth was in the south (1.6%) and in the central region (1.5%). In Haifa, real estate has risen in price by 1% in a month.

However, compared to prices for the same period last year, there was an increase in all regions. In central, prices increased by 11.9%, in Jerusalem - by 9.9%, in the north - by 9.6%, in the south - by 9%, in Tel Aviv - by 8.8%, in Haifa - by 8.1%.

Also read: Real Estate Facts That Will Surprise You in Israel

The Bank of Israel has announced a series of reforms designed to simplify the process of obtaining a mortgage for borrowers. He instructed Israeli banks to make the process more transparent by providing only three interest rate options and making it easier to choose between banks.

The new measures will allow customers to apply for a mortgage online and ensure that banks provide everyone who meets the requirements with a standard initial approval in a single format within a few days after the request.

According to the new plan, banks will also have to use a calculator for various mortgage plans, as well as provide information on the maximum payment, potential interest rate changes.

At the end of last month, the government unveiled a major housing construction plan for 2022-2025, aimed at increasing the supply of apartments and, as a result, reducing prices.

According to a report by the Alrov Real Estate Research Institute at the Koller School of Management at Tel Aviv University, the average cost of a four-room apartment in Israel is $682,608. And the average capital required for a minimum down payment of 30% and related expenses is estimated at about $261,140.

Despite these difficulties, the total amount of mortgage loans taken out by Israelis in August reached a record level of $3.7 billion. According to the Central Bank, in October this figure was at the level of $3.45 billion.

CSI also reported a 2.6% increase in the Consumer Price Index since the beginning of the year. But Lieberman said that by the end of the week the government will prepare two packages of measures to combat the cost of living and exports, promising that these will be "very significant steps."

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