Israeli Housing Market Shows Slight Recovery Amid Inflation Concerns

Investment house Psagot's weekly economic review highlights a modest recovery in Israel's real estate market, primarily driven by increased sales of new apartments. Despite this uptick, overall sales figures remain below previous levels, and the inventory of unsold new apartments is still substantial. Consequently, Psagot economists do not anticipate significant changes in housing prices in the near future.

The review also addresses global economic trends, noting that U.S. inflation data, with a 0.4% rise in the general index and a 0.3% increase in the core index, strengthens the likelihood of an interest rate hike by the Federal Reserve. Rising oil prices, exceeding $100 per barrel, and the Fed's desire to bolster confidence in its independence further support this expectation. The European Central Bank has already raised its interest rate by 0.25% and signaled a hawkish stance due to concerns about the secondary effects of ongoing conflict on inflation. Inflation forecasts for the Eurozone have been revised upward, with inflation expected to remain above target even by 2028.