Home prices have risen a nominal 8.6 percent (6.7% in real terms) over the past
12 months, leading to a decline in Bank Hapoalim’s home buyer’s index. The index
fell 0.8% in November to 124.3, a score set relative to 100 at the start of
1996. That figure is down nearly 8 points from a year earlier, representing a
continued trend of increasing hardship for home buyers.
The index takes
into account the price of housing, unemployment, average wages and the cost of
monthly loan payments, as influenced by the average interest rate for
According to Bank Hapoalim, housing sales slumped 6% in
October and November relative to the third quarter, though demand remained
Labor MK Itzik Shmuli on Tuesday accused the Bank of Israel of
fueling high housing prices by keeping the interest rate low, making the market
attractive for investors.
In response, Bank of Israel Governor Karnit
Flug said the bank had installed new taxes and restrictions to make the market
more accessible to new buyers and dampen the appeal of investors.
the repercussions for the housing market, she said, the low interest rates were
necessary to aid the overall economy.
“If we were to leave the interest
rate high, the damage to the economy as a whole, to exports and to employment,
would have been much more serious,” Flug said. “Therefore, the measures in the
housing market are intended to reduce the effects of the interest rate on the
risks in the housing market.”
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