Finance minister sees imminent home price drop

Bezalel Smotrich at the Mortgage Consultants Conference  credit: Israel Pinhasov
Bezalel Smotrich at the Mortgage Consultants Conference credit: Israel Pinhasov

Minister of Finance Bezalel Smotrich said prices would fall substantially, and attacked the Bank of Israel's policy on variable-rate mortgage loans.

Speaking at the Mortgage Consultants Conference in Eilat yesterday, Minister of Finance Bezalel Smotrich said, "Housing prices will fall substantially in the near future - a very positive trend, even if, as is the way with positive economic trends, it comes in difficult ways. We are seeing contractors coming out with more special offers. This is a way of cutting prices without lowering the official price and of maintaining a high threshold."

"We are publishing land tenders in cities in the periphery at rock-bottom prices," Smotrich added. "We have published tenders at NIS 200,000 per housing unit." Smotrich said that he saw this as something positive. "Citizens of the State of Israel have to be able to obtain a roof over their heads in an orderly manner, whether through purchase or through rental. There is often correlation between the two," he said.

Commenting on the forthcoming Economic Arrangements Bill, Smotrich said that it contained several reforms to do with housing.

Later in his speech, Smotrich attacked the governor of the Bank of Israel, saying that he was very mistaken in expanding the permitted variable-rate, prime-linked component of mortgage loans. "Over a year ago, the Bank of Israel estimated that we were not headed for higher interest rates and considerable expanded the prime-linked component of loans at high leverage with very low equity. It assessed the situation wrongly," he said.

"The state, as the state, has to manage risk flexibly. It’s a problem - risk management in the country is not balanced. Everyone tends towards conservatism, and the result is a huge burden of regulation and bureaucracy. I always say that risk should be managed conservatively, but in a way that is flexible and enabling, but if we had been more cautious in relation to mortgages and built a portfolio a little less risky, even if more expensive at first sight, many people would have been saved real difficulty."

Smotrich also said that in his opinion it was possible to cool the real estate market. "We are going strongly into long-term rentals, and introducing another three measures that will encourage construction for long-term rental, including on taxation. There are people who, for no good reason, feel that it’s urgent to buy, and who could happily wait another few years renting. It’s possible to cool the market down. A time of crisis is a time for drawing conclusions and learning lessons. We have to learn for the future."

Published by Globes, Israel business news - en.globes.co.il - on February 1, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Bezalel Smotrich at the Mortgage Consultants Conference  credit: Israel Pinhasov
Bezalel Smotrich at the Mortgage Consultants Conference credit: Israel Pinhasov
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