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Don't count on a solution: it doesn't seem like the government is interested in fighting apartment prices Israel today

2022-08-16T07:22:56.419Z


Apartment prices, which jumped by almost 18% in the last year, are a failure of Israel's governments - the current one and those that preceded it • What is required in the current situation is an emergency discussion of the relevant parties in the government in order to formulate a serious plan, something that is currently not in sight.


Apartment prices, which jumped by almost 18% in the last year, are a failure of Israel's governments - the current one and those that preceded it.

This is an unimaginable rate of increase, which makes the dream of an apartment even further away for the young couples.

More and more of these couples are forced to take out high-risk loans, to make up for what they lack in equity and take out high-leverage mortgages.

According to estimates, in order to purchase an average apartment in Israel you have to work for 220 whole months - and this does not include living expenses, which according to the Central Bureau of Statistics has also become more expensive by more than 5% in the past year.

The bad news is that as of now, it doesn't look like home prices will ease in the coming months.

Recently, various encouraging data have been published, indicating signs of cooling in the real estate market: the number of transactions has decreased, the number of investors in the real estate market has decreased, the volume of mortgages taken has been relatively restrained.

All of these gave hope that the real estate market was cooling down, but not only did it not "cool down" - but it reached a boil and accelerated to a level not seen since 2010, shortly before the social protest burst into our lives.

will move to live abroad

The government needs to wake up and act to curb the rate of increase in apartment prices, because the inability to buy a house in Israel combined with the rising cost of living may cause more and more families to decide to try their luck abroad and leave the country, even if for a few years, to places where living is cheaper.

Does the government really want to fight housing prices at all?

It doesn't seem so.

By drawing 16,000 apartments, the annual rate of increase, which has already reached 20%, is not lowered.

According to sources in the building industry, the main reason that led to such a sharp increase in apartment prices today is a dramatic drop in land marketing in the last three years - when the corona virus broke into our lives and we went to elections time after time without a stable government.

When land marketing returned to the normal pace, there was an increase in the volume of demand fueled, among other things, by the low interest rates that existed at the time and the low purchase tax for investors.

The demands kept increasing so that we reached a situation where today the supply in the housing market is also small, which means that the contractors can demand any price in some places and get it because there is not enough competition, there are not enough apartments on the shelf, because even when the state sells land, the bureaucracy blocks the construction.

From the moment the land is sold until they start selling apartments, they wait for a building permit for about 30 unnecessary months.

The housing default in Israel will leave the Bank of Israel no choice but to raise the interest rate by 0.5% and maybe even more.

It will take time for the high interest rate to curb the rate of inflation, but it will immediately affect the mortgage repayments of those households that are already collapsing under the burden of the cost of living.

What is required in the current situation is an emergency discussion of the relevant parties in the government in order to formulate a serious plan to combat the skyrocketing apartment prices, something that is currently not in sight.

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Source: israelhayom

All news articles on 2022-08-16

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