Leumi sees home price rise accelerating

Homes under construction / Photo: Rafi Kotz, Globes

"The rise in home prices will reach a high single-digit level in 2021."

"The rise in home prices will continue to accelerate and will reach a high single-digit level in 2021. This rise will reflect the recovery in demand for economic reasons, and is also a result of demographic expansion and the shortage of supply," Bank Leumi's economists write in their weekly market survey.

Last week, the Central Bureau of Statistics released Consumer Price Index (CPI) figures for March. The CPI rose 0.6% last month, which compares with market expectations of a 0.5% rise. Home prices in the period January-February 2021 rose 0.3% in comparison with the December-January period. In the twelve months to the end of February, prices rose 4%.

In the wake of the CPI reading, Bank Leumi chief economist Gil Bufman and Leumi Capital Markets strategist David Reznik write, "In the past year, the CPI has risen 0.2%, and the continuing rise in the twelve-month inflation figure is in line with our forecast. Since the beginning of this year, the CPI has risen 0.8%; the CPI excluding fresh produce has risen 0.9%; and the CPI excluding housing and the CPI excluding energy each rose 0.6%. The rise in the CPI in March was over a wide range of sub-items, with substantial contributions from housing, transport and communications, education culture and entertainment, and clothing and footwear."

Bufman and Reznik see the acceleration in annual inflation continuing in the coming months. "The CPI is expected to rise 0.2-0.4% in April, and the twelve-month inflation rate is expected to continue rising from 0.2% in March to 0.7-1.2% in April. For 2021, the rise in the CPI is expected to be 1.5-2%."

Published by Globes, Israel business news - en.globes.co.il - on April 18, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Homes under construction / Photo: Rafi Kotz, Globes
Homes under construction / Photo: Rafi Kotz, Globes
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