"The rise in housing prices will come to an end in the first quarter of 2010, and toward the end of the year there will be a substantial drop in prices because of the increase in supply and competition between developers," Minister of Housing and Construction Ariel Atias told “IDF Radio" (Galei Zahal) today.
After the Bank of Israel published a special and unusual report on the housing market yesterday, which concluded that the rise in housing prices would ease, officials are still trying to cool down the overheated housing market. In addition to Atias, “IDF Radio" also interviewed Bank of Israel director of macro policy Dr. Michel Stravchinski.
Stravchinski said, "There is no real estate bubble in Israel. The moment that there is a balanced policy to release land, the rise in prices will ease. We're not talking about a plunge in prices. There are countries, such as Spain and England where housing prices have plummeted. There has been a decline in housing starts in Israel in the past ten years, in contrast to what happened elsewhere in the world."
Atias said there was a real estate bubble in Tel Aviv, but no bubble in the rest of the country. "Young couples cannot dream of an apartment today. The rise in prices is due to a shortage of housing on the market. Demand is greater than supply, and we're now dealing with this. Israel needs 40,000 housing units a year, and in practice there are only 25,000. We're publishing land tenders for thousands of housing units, and we'll see the change in prices in the first quarter of 2010, when sales on paper will begin on these tenders."
Published by Globes [online], Israel business news - www.globes-online.com - on October 8, 2009
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