Prior to now few weeks, Ministry of Finance officers have been holding conferences with officers from the Israel Land Authority and the Ministry of Development and Housing to be able to advance Minister of Finance Avigdor Liberman’s new housing plan, as a consequence of be offered formally subsequent month.

The talks started beneath the heavy shadow of the final Housing Worth index studying for 2021, which confirmed an increase of two.3% in December-January as compared with November-December. The most recent studying, for January February as compared with December-January, was significantly decrease, at 1.8%, nevertheless it put an finish to the hopes expressed by authorities ministers, Liberman chief amongst them, that dwelling costs would rise by simply 6% this 12 months.

Final week, simply days earlier than the discharge of the newest index figures, Financial institution Leumi printed a survey by economist Alon Kol Kreis based on which housing costs in Israel will rise by 9-13% this 12 months.

Moreover, the final 4 Housing Worth Index readings point out an annual price of enhance of 24%. That price raises appreciable concern that the federal government’s coverage is insufficient. Authorities officers additionally imagine that present coverage is mistaken, and that there needs to be a change from what occurred within the second half of final 12 months.

Demand driving rises, not provide

The constructing begins statistics are an instance of the truth that copying and pasting elements of earlier housing applications is not sufficient. The federal government got here into energy final 12 months when the tempo of constructing begins was just like that of the earlier two years, that’s to say, not dangerous. The second half of final 12 months broke information, bringing buildings begins to numbers not seen for many years.

However, authorities sources say that this isn’t what is going to convey down housing costs, and that the declare that “there is a housing scarcity” is weak. Though consumers are primarily falling on new properties, the inventory of unsold properties within the palms of the contractors, which represents the provision of latest properties, ranged between 44,000 and 47,000 final 12 months.

Accordingly, senior authorities officers imagine that the rise in costs is far more to do with demand than with provide. All agree that 2022 won’t see final 12 months’s document gross sales volumes, whereas the tempo of development is anticipated to stay related, in order that there is no such thing as a concern over housing provide, and that isn’t what the federal government must be coping with.

In line with these officers, if the intention is to chill the market down, demand somewhat than provide must be the main focus of coverage. How can demand be focused? Elevating buy tax for funding consumers and elevating rates of interest are a part of the try to do this. It appears, nonetheless, that these measures are solely partially efficient, and they don’t seem to be anticipated to have an effect on costs within the speedy future.







Financial institution Leumi believes that though costs won’t fall within the coming 12 months, demand will reasonable, and as compared with the height 12 months of 2021, through which there have been 151,000 transactions, transaction volumes will decline. This will likely be a consequence of the rise in buy tax for buyers and the change in financial coverage by the Financial institution of Israel. Final week, the central financial institution raised its rate of interest from 0.1% to 0.35%, and Financial institution Leumi estimates that the speed will attain 0.75% by the top of 2022.

Financial institution Leumi doesn’t see the newest authorities backed home buy scheme as having any fast impact on costs, and there will likely be no extra lotteries for discounted housing in prestigious areas resembling Tel Aviv, Herzliya and Ra’anana. These at the moment happening in Tel Aviv are a leftover from the “Purchaser Worth” scheme.

Typically, Financial institution Leumi finds in its survey that though demand for housing will decline this 12 months, it is going to nonetheless stay excessive, and so costs will rise. It sees worth rises moderating from subsequent 12 months on.

“Within the coming 12 months, demand pressures will weaken considerably, primarily due to the expectation of a slowdown in gross sales,” the Financial institution Leumi survey states. “All the identical, in our view, this slowdown will likely be restricted and residential costs are nonetheless anticipated to rise by 9-13% over 2022.

“It’s because a decline in demand usually tends to have an effect on dwelling costs with a delay. Many contractors won’t rush to chop costs within the face of decrease demand, once they take into account the pretty low inventory of unsold properties held by them on the finish of 2021. The overall rise within the price of inflation within the financial system this 12 months additionally helps an increase in dwelling costs.”

Revealed by Globes, Israel enterprise information – en.globes.co.il – on April 20, 2022.

Ā© Copyright of Globes Writer Itonut (1983) Ltd., 2022.




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