Israel’s housing market saw prices fall for the first time since 2020 and there are signs that inflation is slowing, figures released by the Central Bureau of Statistics Friday showed.
According to the CBS, home prices fell 0.2 percent in January-February 2023 when compared to prices from a month earlier. The numbers come after several months that saw the pace of rising prices slow to a near-halt following interest rate hikes by the Bank of Israel. Prices of new homes fell even further, by 0.3%.
The last time prices fell month-over-month was April-May 2020, as the coronavirus pandemic began to bite into the economy.
Housing prices had rocketed over the past two years as the pandemic faded, amid rampant inflation at home and abroad. In December, the statistics bureau said home prices were 20% higher in September-October 2022 than a year earlier; that figure has now fallen to 12.7% when comparing January-February to the same period in 2022.
Home prices fell a full percentage point or more in the south and Jerusalem, while Haifa and Tel Aviv saw prices slink by 0.5% each. The inexorable climb of prices continued in northern Israel, which saw a 2% hike, and in the central region surrounding Tel Aviv, which rose 0.3%.
The bureau also released numbers showing inflationary pressures remaining, with consumer prices jumping another 0.4% in March over the previous month.
The consumer price index, which tracks inflation, jumped by as much as 1.1% last year. Since September 2022, prices have continued to rise by between 0.1% and 0.6% month over month.
The biggest price jumps were seen in clothing, shoes, poultry and vacation rentals. On the other hand, consumers spent less on fresh produce, disposable goods, fuel and used cars.
The bureau noted that prices of matzah rose 20% for Passover 2023 compared to the year previous.
The Bank of Israel has repeatedly hiked interest rates over the past year in a bid to bring down inflation, mirroring moves by the US Federal Reserve. The policies have led to a steep drop in home sales, with mortgages that totaled nearly NIS 14 billion ($3.8 billion) less than a year ago falling to less than half of that in January.
Earlier this month, the bank raised its benchmark rate to 4.5% while issuing guidance showing that the judicial overhaul being pushed by the government could significantly harm economic growth.
At the time, the bank noted that year-over-year inflation was not fading as quickly as previously predicted.
“Economic activity in Israel is at a high level, and is accompanied by a tight labor market, although there is some moderation in a number of indicators,” the central bank said. “There has been some moderation in annual inflation, but the moderation is slower than previous assessments.”
The bank forecast that should the overhaul issue be dealt with in a way that reduces internal tensions and conflict, the economy could quickly recover, with the inflation rate easing to 3.9% by the end of this year, versus 3% forecasted in January, and moving to 2.3% in 2024.