Mizrahi Tefahot CEO slams gov't real estate policy

Eldad Fresher
Eldad Fresher

Speaking at the Globes Real Estate Conference, Eldad Fresher blamed the government for complete chaos in Israel's real estate market.

Speaking today at the 2017 annual "Globes" Real Estate Conference, Mizrahi Tefahot Bank (TASE:MZTF) CEO Eldad Fresher today said that real estate prices were still going up, and even faster, since Minister of Finance Moshe Kahlon announced that prices would fall.

"As CEOs, we come to the board of directors and tell them what we want to achieve. Sometimes we achieve it, and sometimes we don't, but at least there is a detailed plan with defined targets. What's happening in the real estate market? First, they promised us that real estate prices would go down, then we heard a statement saying that wasn't the goal at all. All sorts of figures were published later, so it's not clear what exactly the trend is.

"What is actually happening? We see that according to the Central Bureau of Statistics, housing prices have been rising, including during the Kahlon's term. Housing prices are still rising. You can see it by the mortgage data: according to these data, mortgages averaged NIS 1,177,000 in 2014, compared with NIS 1,318,000 in 2016.

"On the other hand, there is a drop in the number of real estate deals, because there is complete chaos in the market, a lack of clarity, and no guiding hand, and it is unclear where the housing market is headed. When there is no certainty, people sit on the fence for a long time. We saw this with the preceding government during the 0% VAT period. The number of deals plummeted dramatically, and the demand resumed after the uncertainty was cleared up."

Fresher added, "There is a horrifying lack of coordination between the authorities. For example, take an area in which the various parties are working together - real estate investments. The government took action to give itself a breathing space, and took concerted and deliberate action against the investors. At the same time, the Ministry of Finance and the Bank of Israel employed a battery of measures: higher taxes and limitations on the proportion of financing. The result seen over the past two years is a massive drop in the proportion of investors, from 30% to 15%. According to the defined target, this was a success, and the goal was achieved.

"At the same time that they took the demand out of the market, however, they decided to increase demand in the market through the buyer fixed price plan, and this plan stimulated both demand and prices. Most of the market is in outlying areas, and this will lead to a shortage of supply in the central region. The result is liable to be a dramatic rise in rent in the central region, and it's by no means sure that this is the result they wanted to achieve."

Published by Globes [online], Israel Business News - www.globes-online.com - on February 26, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Eldad Fresher
Eldad Fresher
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