No substantial decrease in housing prices

March 4, 2016

In an article published yesterday in Globes [online] Israel Business News, Israeli Finance Minister, Moshe Kahlon, foresees no substantial decrease in housing prices in the near future.

“‘We are at the height of our work on real estate prices,’ Kahlon remarked. ‘We are flooding the market with land, and are conducting buyer fixed price tenders in order to provide a solution for young couples that have never had a chance to see an apartment. I’m telling you they’ll see an apartment; they’ll have an apartment’…….Kahlon repeated his statement at the Globes Real Estate Summit yesterday: ‘It takes 10 years to repair damage done in a day, and here we have damage that has accumulated from previous governments. This crisis began in 2006. My plans are underway. They are being criticized, but in contrast to the past, when they didn’t manage to get plans approved, I took the authority myself, and am approving plans.'”

“Asked about his opinion of forecasts by economists that a moderate drop in housing prices should be expected, not a steep one, Kahlon answered, ‘I think that’s right. We don’t want to create crises in any sector. We want a normal economy……”There are so many variables in this market. The interest rate is a variable, planning is a variable. Nothing will go back to the way it was 10 years ago. What if there’s an economic crisis? Look what’s happening in the world around us. I can state with certainty that young people will have the possibility of buying apartments they never thought they would.'”

[RE/MAX commentary] It seems reasonable to assume that housing prices, especially in Jerusalem & the greater Tel Aviv area, will remain stable, or perhaps even increase, albeit at a slower rate, for the foreseeable future.  Mortgages are readily available and interest rates are seductively low.  Existing supply of housing units is still outstripped by demand.  None of these factors point to significant price decreases.