Rise in Housing Prices Slow but Higher than 2021

In November, there was a slowdown in the persistent increase in housing prices, which had been happening in 2022.

According to numbers shared on Sunday by the Central Bureau of Statistics, the prices were still 19% higher than in 2021 in the same period.

New housing report

The new housing report showed that between October and November 2022, there was an 18.8% increase in housing prices, as opposed to the same period in 2021.

There was also a 0.3% increase in the prices in this period as compared to September to October 2022. This was a slight decline from the previous monthly report that CBS had published.

It had shown that housing prices between September and October 2022 had risen by a record 20.3%, as opposed to the same period in 2021.

As per the CBS figures, this was the largest increase year-on-year since May and June 2010, when there had been a 20.4% increase in housing prices, as opposed to 2009.

The highest price rises in October to November 2022 had taken place in northern Israel, where there had been a 21.7% increase in prices.

There had also been an increase of 21% in housing prices in central Israel from October to November 2021.

The breakdown

The report showed that there had also been a 13% increase in prices in southern Israel in the same period. There was an increase of 18% and 15.9% in housing prices of Tel Aviv and Jerusalem, respectively.

Due to inadequate supply and growth in population, there is high demand in the Israeli housing market, which has seen a massive increase in housing prices in recent years.

Since 2018, there has been a steady increase in housing prices across Israel, although they did pause briefly in 2020 because of the COVID-19 pandemic.

The increasing cost of living and housing prices is a key grievance of Israelis, even though it has been more than a decade since there had social unrest in the country over the issue.

The rise

Prices had begun to rise closer to 20% last year during May and June and September and October had seen them reach a peak of 20.3%.

There had also been a steady rise in the benchmark interest rate in the second half of last year, which had started in April when the rate had stood at 0.1%.

The Bank of Israel had begun hiking the interest rate for slowing down the inflation in the country, due to which the rate has reached 3.75% now.

The annual increase in inflation in 2022 had been around 5.3%, which was a rise of 2.8% as compared to a year earlier.

This had been mostly due to the rise in the cost of transportation, housing, food and communication. Due to these increases, there has been a substantial increase in the monthly mortgage payments as well.

Every time there is a hike in the interest rate, the cost of mortgages also rises because most of them are variable interest rate deals.