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Housing prices soaring but new housing starts signal future relief

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As The cost of living in Israel continues to rise Steadily, rising house prices represent one of the trends most affecting the country’s residents as it impacts both rent and mortgage costs.

Housing costs rose 1.1% from August to September, up 19.8% year-on-year, according to a new report from the Central Bureau of Statistics.This increase is the latest in a series of A moderate rise in the real estate market.

This increase has occurred in the last two months recorded by CBS. With this in mind, several factors have come to light since September, including news from the Treasury Department that the number of mortgages has fallen recently, which could be reflected in the October-November report. , indicating that lower demand could lead to lower prices, similar to the increase in housing starts that started this year.

One of the reasons for the current rise in housing costs is Shortage of housing starts started early in COVIDwhich led to a shortage of supply to meet demand dictated by Israel’s best-in-class birth rate.

However, more housing starts have been encouraged by the government this year, May lead to better prices In a couple of years, and possibly sooner, says Professor Danny Ben-Shahar, faculty member and director of the Arlov Institute of Real Estate at Tel Aviv University’s Koller School of Management.

On August 16, 2022, thousands of new apartments were built in the Or Yam district of Or Akiva. (Credit: MICHAEL GILADI/FLASH90)

“It won’t affect the market immediately, but it will affect the market in terms of expectations. coming to the market in the future,” he explained. That narrative could reduce demand as potential buyers decide to wait until (or they would want) the promised reduction to come. .

“People are expecting some degree of standardization in pricing with the completion of housing starts hitting the market in the future,” said Ben-Shahar.

According to Ben-Shahar, the next government needs to address the current housing cost problem urgently. “The government needs to ensure that there is a constant and large supply of land for new construction. It will increase as it increases,” he said.

Similarly, Ben-Shahar stressed that the government needs to make the housing construction process easier to handle in order to ensure a stable housing market.

“Governments need to make supply more flexible and create processes [involved] It is less bureaucratic so that the market can act in a healthier way.”

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