According to today’s Jerusalem Post home prices are expected to rise quickly across Israel. The Bank of Israel’s government appointed head, Stanley Fischer will likely take macro-prudential measures to try to control this expected price rise.
Israeli’s traditionally believe in housing as the most solid investment for themselves and their offspring. In order to combat this national tendency Fischer is raising the interest on funds deposited in the bank 2.25% as an incentive to keep the populace’s money in the bank rather than invested in real estate.
In spite of actions taken in the summer to increase cash downpayments to 40% the number of loans given was 10%higher in Oct.-Nov. than last year Dec. 2009. Last year, house prices increased 17.3% as interest rates remained low and the supply of houses fell short of demand.
Last quarter areas in the country that had not seen steady rises suddenly rose sharply, Beersheva and Hadera 8%. Jerusalem and Tel Aviv steadied at a 3% rise. Only Eilat saw decreases at 4%.
Housing prices since 2008 have risen overall in the country a whopping 29.4%.