On Friday, the Central Bureau of Statistics (CBS) published a report showing that there was a record 19% increase in Israeli housing prices as opposed to last year.
This is the largest year-on-year pricing increase since they began tracking them. The second half of 2018 was when prices began rising, but their continued surge has defied predictions.
Moreover, they have also defied the reality and a drop in demand in most global housing markets that have seen prices fall, or slow down at the very least.
Cost of living
There has been a rise in the cost of living overall, even though it has been a bit more modest as compared to housing prices.
In September, there was a 0.2% rise in the consumer price index (CPI), which took it to 4.3% for the year and it was a year-on-year increase of 4.6%.
Fruits and vegetables had seen prices rise by 3.3%, which contributed to the overall increase in cost of living.
However, if fruits and vegetables and housing costs are removed, then the increase declines to a 0.2% growth adjusted seasonally for a month.
This would be a slower growth rate as opposed to what has been recorded in the previous seven months.
There has been a decline in food prices, with the exception of fruits and vegetables, with tahini falling 4.7%, fresh fish falling 7% and rice dropping 3.9% from past levels.
There has been a 2.1% rise in milk and double-digit price rises have been recorded in fresh produce, with watermelon up by 47.8%, cucumbers 11% and peppers 11.4%.
There is a modest 1% increase in healthcare costs, while a 0.1% fall was reported in cultural and educational costs.
The increase in housing costs defies the market’s logic because new housing demand has dropped, homes have stayed for longer durations on the market and mortgage costs have also gone up.
The country has seen growing outrage due to the increasing cost of living and spiraling housing costs. Social unrest relating to this matter had been seen almost a decade earlier.
With house prices and CPI recording a rise, there is a greater chance that interest rates would continue to be hiked by the Bank of Israel to prevent overheating of the economy.
This would push mortgage rates higher, making it difficult for would-be buyers to get loans for keeping up with rising prices.
Data shows that there is an 8% increase in monthly rent for new tenants, but those on continuing leases are immune to it for the time being. This is because of the huge inflation in house prices.
There was a 1.9% rise in average home prices from July to August, as opposed to June to July, which makes it the third-highest increase in a month as compared to last year.
The North saw a 2.6% increase while Jerusalem recorded a 2.8% increase. Tel Aviv saw housing inflation rise by 1.9%, the center as a whole saw a 1.8% increase, while Haifa saw 2.0%, which was a slowdown as opposed to numbers in the previous month.