A survey of expectations about home prices in 2010 by New Wave for "Globes" found that Israelis are more pessimistic now than in the previous survey in December 2010.
Even as the Bank of Israel continues to raise the interest rate and the Ministry of Housing and Construction releases more land for residential construction, 57.3% of respondents say that home prices will rise in 2011, and only 9% believe that they will fall. 21.5% of respondents say that home prices will remain unchanged, and 12.2% had no opinion.
In the December survey, 48.1% of respondents believed that home prices would rise in 2011, 14.4% predicted that they would fall, and 22.4% said that they would remain unchanged.
After the 40% rise in home prices in the past three years, few Israelis believe that the pace of the rise will slow down this year. 28.9% of the respondents who say that home prices will rise this year believe that the increase will be more than 10%. 36% of the respondents who say that home prices will fall this year believe that the decline will be more than 10%.
29.9% of respondents said that they considered buying an apartment in the past year. 46% of these respondents were aged 25-34, who are apparently seeking to buy their first home, but found that they lack the wherewithal to do so. Only 11% of respondents over 65 said that they considered buying an apartment in the past year, despite talk about moving to a smaller apartment in a big city.
The survey was conducted after the Bank of Israel raised the interest rate. The latest hike boosted the interest rate from 0.5% to 2.5% in 18 months.
46.5% of respondents said that the low mortgage interest rates were an important factor, or a very important factor, in deciding to buy an apartment. The Bank of Israel says that the low mortgage interest rates have been responsible for two thirds of the rise in home prices in the past two years. However, the same proportion of respondents said that interest rates were not a factor in their decision to buy an apartment.
58% of respondents who declared that their income was "far below average" said that the interest rate was a very important factor in a decision whether to buy an apartment. The fact that a large proportion of low-income earners rely on cheap financing to buy a home could be a source of danger for the housing market as the Bank of Israel continues to raise the interest rate.
Published by Globes [online], Israel business news - www.globes-online.com - on March 6, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011