In its latest assessment of the housing market, the Israel Land Administration (ILA) has declared the housing sector one of the most expensive in the world, with prices rising more than 15% in a year.
“The real estate industry is facing unprecedented challenges,” the ILA’s director-general, Dov Lior, told reporters at the agency’s headquarters on Monday.
“The country is facing a difficult time of unprecedented growth.
The challenges are immense.”
He added: “The growth is in areas where we have no competition.
In the cities, the growth is driven by the demand from the suburbs.
In Israel’s countryside, the housing is the main reason why we are the most developed country in the Middle East.”
A survey published in the Times of Israel last week revealed that the number of homes under construction in the country has been flat since the start of the year, with the vast majority of new construction going to apartment buildings.
The ILA estimates that the country is now home to more than 1.8 million units, but many analysts expect the total number of units to surpass 1.9 million in coming years.
“In our view, the market is in crisis.
The housing bubble is at its peak,” said Yossi Golan, a senior economist at Tel Aviv University.
“I think the real estate bubble is in the process of bursting.”
Golan also warned that the realty market could take years to recover, saying: “I don’t see a scenario in which the housing bubble will be broken in the next two to three years.”‘
Housing bubble’ or ‘housing bubble’?
Many Israeli economists have also warned against using the ILS’ findings as a “housing bubble”, saying the ILCA’s numbers do not reflect the country’s housing market.
“Housing bubbles are not the norm.
There is a housing bubble in Israel, and it is not going to burst anytime soon,” said Dr. Yossa Dror, a professor of public policy at the Technion-Israel Institute of Technology.
The housing bubble, which has been on the rise since 2014, has resulted in a massive increase in prices in recent years, and the Ilsa report is the latest sign that the housing crisis is deepening.
The growth in the number and prices of rental units is largely a result of the government’s efforts to ease regulations and boost property values.
But the Ila’s figures suggest that the construction of new housing has stalled in the past two years, with just one new housing project under construction last year.
Lior said the country needs to develop an infrastructure that allows for construction of housing, but the Ilias report does not give any indication of how this will be done.
“It is important to see how the construction boom is going to affect the rental market, and what the housing boom will bring in terms of housing prices and rental demand,” he said.
The report also pointed out that prices have fallen sharply in the first three months of this year, and that the Ilaha’s numbers were based on data from the first half of the current year, when construction of rental housing was slow.
“There are two factors behind the decline: the number [of units] has decreased, and people are less willing to buy, which means more homes are being built, creating a housing shortage,” Dror added.