BoI: Housing market will cool in coming year

Bank emphasizes that while the annual rate of increase in house prices continues to be high – an annualized rate of 15.3% – it expects the increase to slow “over the course of the coming year.”

By NADAV SHEMER
July 11, 2011 23:56
1 minute read.
Bank of Israel Governor Stanley Fischer

Stanley Fischer speech at BGU 311. (photo credit: Dani Machlis/BGU)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later

The Bank of Israel believes measures taken by it and by the Finance Ministry will lead to a slowdown in the rise in housing prices in the coming year, according to the minutes of its July interest-rate decision.

The details of the narrow-forum policy discussion among Bank of Israel Governor Stanley Fischer and four members of management, which were released Monday, reveal that three of the four recommended making no changes to the interest rate, which the bank kept at 3.25 percent.

Be the first to know - Join our Facebook page.


The remaining member of management recommended a quarter-percentage-point rise on the basis that the central bank should adopt a firmer policy with regard to housing prices, as long as there is no clear evidence that the steps taken so far are having a significant effect.

But in announcing its decision, the bank emphasized that while the annual rate of increase in house prices continues to be high – an annualized rate of 15.3% – it expects the increase to slow “over the course of the coming year.” It said the reasons for this prediction were “the effect of [previous] interest-rate increases, steps by the Bank of Israel in the mortgage market and steps by the Finance Ministry regarding real-estate taxation, together with the continued growth in building starts.”

The central bank also emphasized in its decision that indicators point to more-moderate economic growth in the second quarter, that central-bank interest rates in the major advanced economies are still low and that the past three consumer-price-index readings have been consistent with achieving the target inflation range.

“Inflation over the previous 12 months continues to be high, at 4.1%,” the minutes said. “However, inflation expectations for the next 12 months derived from the capital market and the average of the forecasters’ expectations declined over the past month, and are now slightly below the upper limit of the range.”

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS