Despite campaign promises, housing prices continue to rise

May 23, 2016  

A new report on housing prices in Israel offers more grim news after a glimmer hope earlier this year, showing that despite programs by Finance Minister Moshe Kahlon and his predecessor Yair Lapid, costs continue to rise unabated.

According to the report, produced by government assessor Tal Aldrotti, prices for three-room apartments rose by 1.6% in the first quarter of 2016. And from the first quarter of 2015 to the first quarter of 2016, prices surged by 8%.

In February, a report by the Central Bureau of Statistics indicated that housing prices declined slightly in January of 2016, the first drop in years, raising hopes that the five-year surge in housing prices was nearing its end. The latest assessment, however, shows that the drop in prices was passing, and not a sign of a larger trend.

The report also lays bare the failure of programs by both Kahlon and Lapid to lower the cost of housing, a major plank of both of their campaigns.

From the first quarter of 2014 to the first quarter of 2015 – corresponding with the second half of Yair Lapid’s two-year term as Finance Minister, housing prices rose by 4%. The rate of increase doubled under Kahlon, to 8%.

This can be at least partially attributed to a slow-down in sales in anticipation of Lapid’s proposal to exempt some new apartment purchases from the value-added tax. Uncertain of the plan’s viability, potential home-buyers often delayed their purchases, according to the report, somewhat reducing the price surge in 2014, while causing a greater rise in 2015 as those buyers returned to the market.

For the survey, Aldrotti compared the prices of more than 5,200 sales covering 16 cities.

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