"Home prices will likely stabilize and then fall 10-15% over the next 2-3 years," said Meitav Investment House Ltd. chairman Zvi Stepak at a haredi (ultra-orthodox) economic conference last week. He added that the rise in home prices since 2007 was a one-time correction to the preceding fall in prices in 1996-2005. However the rise in home prices in the past year overcorrected, he said.
"Home prices in Israel do not reflect a bubble, but they are unquestionably high," said Stepak. "Therefore, home prices will likely stabilize and then fall 10-15% over the next 2-3 years."
As for the capital market, Stepak said, "There is no investment without risk, and the key question is always, what is the risk-reward ratio?" He stressed the need for a broader diversification of investment with an emphasis on gold and investments with a low correlation to the stock market, such as strategic funds.
Commenting on geopolitical risks from the expected declaration of a Palestinian state by the UN General Assembly in September, and instabilities caused by the Arab Spring, Stepak said, "The scenario of gradual growth, which is Meitav's main scenario, and a positive trend in the world's stock markets and on the TASE, should continue."
He added, "You should hold a relatively high proportion of stocks together with hedges against sharp falls - catastrophe insurance."
Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2011
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