Bank of Israel expects housing demand to slow

Housing demand in the Jewish sector is expected to slow down gradually in the next decade as the number of youths joining the adult population declines, the Bank of Israel said in a report Wednesday.

The annual increase in dwellings needed to meet the Jewish population’s demographic needs dropped from 48,000 in the year 2000 to 40,000 in 2010, according to the central bank. It estimated that this number would drop to 35,000- 36,000 by the year 2019.

Interest in this data has grown in recent years, in correlation with an increase in housing prices, the report said. It pointed out that a relative shortage in housing supply is seen as one factor – along with low interest rates – for this increase.

The bank made its forecast by distinguishing between demographic processes that create a need for homes, such as young people joining the adult population and immigration, and those that cause dwellings to be vacated, such as mortality and emigration. The difference between the two is the net annual need for more homes. The bank creates estimates relating to the Jewish sector only, due to data limitations on construction in the Arab sector.

Meanwhile, the Bank of Israel’s currency department released its annual report Wednesday, announcing that the amount of currency in circulation rose about 9 percent to NIS 49 billion in 2011.

The increase was caused by population growth and by expansion of economic activity. This matched last year’s 9% increase but fell short of the increases in 2008 and 2009, when the amount of currency grew by 19% and 21% respectively.

Banknotes constituted 97%, or NIS 47.4b., of the total value of money in circulation, and coins accounted for 3%, or NIS 1.6b. The proportion of NIS 200 banknotes increased again last year, by 18%, due to their broader distribution in automated teller machines. The average ATM withdrawal was NIS 616 in 2011, a 5% increase from the previous year.

Ten-agorot coins, used mainly for change on public transport, accounted for 59% of the coins in circulation. One-shekel coins, used mainly in parking meters and vending machines, accounted for 24%.

Fifty-agorot coins, which went out of fashion when the Egged and Dan bus companies changed their one-trip fares to NIS 6.40 this year, accounted for 8%. The two-shekel coin, which came into circulation in 2007, accounted for 3%. The five shekel and 10-shekel coins accounted for the remaining 6%.