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Tougher conditions for investors: a temporary step until the government increases supply Israel today

2021-10-07T22:21:32.513Z


The Bank of Israel will prohibit banks from providing additional loans to finance equity • In the long run, the government must act to increase the supply of apartments


In order to lower the leverage rate in the real estate market, the Bank of Israel has announced the application of a ban on commercial banks providing additional loans for the purpose of financing equity for the purchase of an apartment.

Real estate is a particularly challenging market for policymakers, not only in Israel and the corona has challenged the field even further.

We have become accustomed to recognizing a different reality: When bad for business and bad for households, stocks and apartment prices go down.

And here the world is faced with the need to explain something completely different.

The Bank of Israel's directives are intended to reduce the leverage of the market, Photo: Oren Ben Hakon

The immediate danger from the real estate market is credit. It is a leveraged industry by its very nature, and it is all based on current valuations.

This is a point where a credit crunch breaks out - an area for which the Bank of Israel is in charge.

The Bank of Israel's directives are intended to reduce the leverage of this area, thereby reducing the exposure of the banking system and of households.

These are reasonable steps given the existing circumstances, but in the longer term, it is the government that must act to change those circumstances: mainly to increase the supply of apartments.

Denying citizens legitimacy to purchase apartments for investment, as recent governments have done, is completely unreasonable.

She is the one who led so many Israelis to invest in real estate abroad.

Increasing the supply of apartments in the country will not only meet the citizens' demand to include an apartment in their investment portfolio, but will also enrich the state coffers and improve the market, in which the lack of investors has already reduced the supply of apartments for rent.

Source: israelhayom

All news articles on 2021-10-07

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