Leumi: Home prices will continue to rise

New homes in Rosh Ha'ayin Photo: Yossi Cohen

In the Tel Aviv region housing demand is up and the supply of homes is down.

Demand for housing will remain high, and the shortage of housing will persist in the short term and continue to push prices upwards, Bank Leumi (TASE: LUMI) economists predict in their weekly survey published today.

The bank noted that segmenting the Central Bureau of Statistics figures for housing demand in January-July shows great variation in demand between different regions in Israel. In Tel Aviv and the central region, the leading demand areas, the gap between housing demand and supply has widened, thereby adding further upward pressure on prices.

In the Tel Aviv region, example, demand for new housing units was up by 363, while the stock of housing units in this region fell by 325, meaning that the gap between supply and demand in Tel Aviv grew by 688 housing units. In the central region, demand fell, but the fall in the stock of housing units was even steeper, so the gap between supply and demand also widened there, although to a lesser extent. In the other regions, on the other hand, the gap between supply and demand narrowed, especially in Haifa and the northern region, probably due to accelerated construction there.

Due to the variance in the supply of and demand for housing between different regions in Israel, Bank Leumi recommends that the government adopt a different approach to the supply of housing in the various regions: increasing the supply in the leading demand areas, where the gap has widened.

Bank Leumi believes that demand for housing will remain high in the coming months, given a 2% annual population increase and a macroeconomic environment featuring low interest rates, historically low unemployment rates, the lack of low-risk investment alternatives and a relatively stable return, and expectations by housing buyers that the shortage of housing will persist in the short term.

Published by Globes [online], Israel business news - www.globes-online.com - on September 13, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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New homes in Rosh Ha'ayin Photo: Yossi Cohen
New homes in Rosh Ha'ayin Photo: Yossi Cohen
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