Flug: We Hope for Gradual Price Drops in Housing Market

A view of construction in Beitar Illit. (Flash90/Nati Shohat)

Housing prices in Israel continue to rise, if at a lower pace than previously. Prices for homes rose an average of 0.1 percent in the April-May period over their levels in the February-March period, the Central Bureau of Statistics said in its latest report. Over the past year, prices were up 4.5 percent, the report said. The average cost of a home or apartment in Israel is now NIS 1.445 million (about $410,000).

Commenting on the housing situation, Bank of Israel head Karnit Flug said that it was too early to say if the recent leveling off of price increases was a permanent trend – or even a desirable one. “There is widespread agreement in all sectors of the economy that major price swings in the housing market are not desirable,” she told a builders conference in Tel Aviv Sunday. “We would like to see a gradual drop in the cost of housing.” Housing prices were actually higher in in-demand areas like Tel Aviv and Yerushalayim, as were rents in these areas, she noted.

There has been much debate in recent months over the way housing costs are being computed, with various trade organizations disputing the numbers released by the CBS. Recent statistics have showed a cooling trend: A CBS report in June said that housing costs were down 2.9 percent in the first quarter, compared to the last quarter of 2016. But according to statistics supplied by mortgage banks, homebuyers borrowed NIS 13 billion in mortgage money in the first quarter of 2017, compared to NIS 12 billion in the previous quarter, and compared to NIS 15 billion in the same period in 2016. According to those figures, housing prices have risen 4.4 percent since the beginning of 2016.

Meanwhile, in a separate report, the CBS said last week that the number of sales had fallen dramatically in May. A total of 6,500 sales were reported in April, 27 percent more than the same month in 2016, while 8,500 sales were reported in May, 7 percent fewer than a year before.

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