Housing Prices Rose 3.74% Under Current Israeli Government
Translated & summarized from Ice by baba
Housing prices in Israel have increased by 3.74% since the current government took office in late 2022, despite its pledge to lower costs. Rental prices have surged by 18% during the same period, impacting public disposable income. Experts suggest the next government must focus on increasing the supply of land for construction and addressing the rental market to stabilize prices.
The story in 5 lines · by baba
- Housing prices rose 3.74% under the current Israeli government, contrary to some claims.
- Rental prices in Israel have increased by approximately 18% since late 2022.
- High interest rates maintained by the Bank of Israel have slowed the housing market.
- The government is urged to increase land supply and address the rental market.
- Tidhar CEO Uri Levin's initial claim of a 20% price drop was based on specific calculations, not overall market prices.
Contrary to a recent statement by Uri Levin, CEO of Tidhar, that housing prices have fallen 20% in four years, a closer examination reveals a different picture. Levin's initial claim, which caused a stir among contractors, was later clarified to be based on inflation and financing benefits for new apartments, not actual market prices. He was reportedly referring to prices that would have been achieved without market slowdowns and financing incentives, which affect only a small portion of the market. Tidhar itself has recently implemented cost-saving measures, including layoffs, expected to save NIS 30 million.
An analysis of housing prices during the current government's term, which began in late 2022/early 2023, shows an increase. The housing price index stood at 568.7 points in December 2022-January 2023 and has since risen to 590 points, a gain of 3.74%. This rise occurred despite the government's stated goal of lowering housing costs and amid high interest rates maintained by Bank of Israel Governor Amir Yaron, which have significantly slowed the market. The decision by Dani Chachiaschwili, Supervisor of Banks, to limit contractor financing deals also contributed to the slowdown.
Rental prices have also surged by approximately 18% under the current government. A rent of NIS 5,500 in late 2022 now costs around NIS 6,490, an increase of NIS 1,000 per month. This rise in rents is attributed to a lack of long-term rental projects, leading to high demand and low supply, and the general stagnation of apartment prices. The shrinking disposable income of the public makes purchasing an apartment, with an average price of NIS 2.4 million, increasingly difficult.
The article suggests that the next government will need to address both the supply side, by encouraging the Israel Land Authority (Rami) to release more land for dense construction beyond discounted housing, and the rental market. The current situation, with rising rents and stagnant purchase prices, is creating a difficult economic environment for potential buyers and renters.
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