"Israel’s housing market is poised for a hard landing, despite two recent Bank of Israel interest-rate cuts," says Global Property Guide in a review of the Israeli market, and changes in home prices, rents, home sales, and mortgage interest rates over the past decade."The slowdown has hit," says Global Property Guide about home prices, noting that after a 22.4 percent rise in homes prices in 2009 and 17% rise in 2010, prices fell by 3.27% in the third quarter of 2011, compared with the preceding quarter - the second consecutive quarter in which prices fell, after an 0.83% drop in the second quarter. "Property prices in Israel are expected to continue falling in the coming months, and construction activity is expected to contract sharply," it adds. The average apartment price was NIS 1,081,100 in the third quarter.After sluggish growth of 19% in 1999-2007, compared with a 24% rise in the Consumer Price Index (CPI) over the same period, the rise in home prices over the past three years has raised questions of whether Israel is now experiencing a housing bubble, says Global Property Guide. It cites three reasons for the rise in prices in 2008-11: a low interest rate environment; demand which outstripped supply; and the increased activity of buyer groups. This is one of the few times that the latter factor has been mentioned by a foreign publication.Global Property Guide is also unusual in citing a link between Israel's economic and security events with housing prices. It mentions the Second Intifada in 2000-03, the high-tech boom, the 2006 Second Lebanon War, and the global economic crisis that erupted in late 2008. Home prices fell with each period of security instability. "Tel Aviv’s housing market suffers the most whenever the country is in conflict."A shortage of affordable housingGlobal Property Guide cites the Bank of Israel figures which show that demand of new housing rose 14% to 36,500 homes in 2009 from 32,015 homes in 2008, and to 18,220 homes in the first half of 2010, almost the same as in the first half of 2009. However, actual sales amounted to just half of the total demand in 2010 - 9,996 homes - "mainly due to the shortage in available supply of apartments in the country."Housing completions totaled 9,501 homes in January-April 2010, 15% less than in the corresponding period of 2009. Housing starts rose 15% in January-April 2010 to 11,690."To deal with the shortage of affordable housing, the Housing Ministry and the Israel Land Administration have marketed tenders for about 24,600 housing units from September 2009 to June 2010."As for rental apartments, the magazine says: "Apartment rents have risen sharply in the past three years." It adds, "In the past 15 years, the homeownership rate in the country has been gradually declining as more households are renting due to the shortage of affordable housing. In 2008, the homeownership rate was 68.8%, down from 73% in 1995."On the current diplomatic-security front, Global Property Guide cites the "Endless Israeli-Palestinian conflict over Jewish settlement in the occupied territories", tensions along the Lebanese border, and the tensions with Turkey. As for the Israeli economy, it says, "Nevertheless, Israel’s economy is fundamentally strong. It withstood the global crisis... Despite political dramas and security threats, Israel’s economy has been growing rapidly. The country has capitalized on its highly skilled and educated workforce, on enormous financial aid from the US. It has built a strong niche in high-tech and IT start-ups, with its position recently strengthened by the discovery of oil and natural gas. In May 2010, Israel became a member of the OECD, the exclusive rich-man’s club."