Housing prices continue to climb, despite reforms

8% jump in Q2 recorded over 2015, 13% in Tel Aviv; state appraiser says too early to see results of treasury initiatives

Raoul Wootliff is the Times of Israel's former political correspondent and producer of the Daily Briefing podcast.

Illustrative: A housing construction site in Jerusalem, October 27, 2013. (Yonatan Sindel/Flash90)
Illustrative: A housing construction site in Jerusalem, October 27, 2013. (Yonatan Sindel/Flash90)

Despite promises by politicians to rein in the market, housing prices in Israel continued to rise in the second quarter of 2016 according to a new government report, although the galloping real estate prices showed slight signs of slowing.

Home prices rose by an average of 2.5 percent since April, and a total of 8% in the last year, according to figures released by the Chief Government Appraiser’s office.

The data shows a rise of 4% for four-room apartments across 16 Israeli cities, including new and already-built residences. Only two of those cities did not see a price hike, while none saw prices go down.

Over the quarter, the price of a home in Herzliya rose 3% to NIS 2.4 million ($633,000) on average; in Jerusalem, it rose 1% to NIS 1.95 million; and in Petah Tikva it rose 1% to NIS 1.62 million.

In Tel Aviv, on average, a four-room apartment now costs NIS 3.09 million, up 4% over last quarter and 13% over 2015.

Finance Minister Moshe Kahlon. (Yonatan Sindel/Flash90)
Finance Minister Moshe Kahlon. (Yonatan Sindel/Flash90)

While prices have continued to rise, they showed a slight tapering off, with an 0.3% decline in the rate of the rise for the May-June period compared with the same months in 2015.

The latest figures hold particular symbolic significance, coming exactly five years after mass social protests broke out across Israel calling on the government to work to lower house prices and the cost of living. Since then, the high cost of housing has become a central political issue in the country, with young families claiming they are being priced out of home ownership or even rentals in the economic center of the country.

Finance Minister Moshe Kahlon, who entered office with promises to cure Israel’s real estate woes, has enacted a series of affordable housing schemes, including a program in which developers receive land at cut-rate prices and sell apartments at a discount to qualified first-time buyers.

Tal Aldroti, the chief state appraiser, wrote in the report that it was too early to see the influence of the program on the market. She made similar comments after prices rose in the first quarter of 2016.

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