The property market in Israel

Azrieli Towers in Tel Aviv

Azrieli Towers in Tel Aviv

Here’s an interesting snippet of financial information about the Israeli property market from Globes:

“2015 is a year that Minister of Finance Moshe Kahlon will want to forget. Completely confounding Kahlon’s stated aim of cooling off the market, activity in the real estate sector reached the boiling point. A summary published today by the Bank of Israel as part of its 2015 annual report shows that proceeds from the sale of new apartments in Israel totaled NIS 64 billion in 2015, 60% more than in 2014.”

That’s some difference. No wonder the skyline was (and still is) bristling with cranes.

Here’s another comparison:

“Real estate taxes accounted for 28% of Israel’s total tax revenue in 2015, compared with just 5.4% in 2014.”

From 5.4% to 28%? Incredible.

On the ground, there is a continuing debate about the property bubble. Prices, in general, are high. And they show little sign of cooling. Will the bubble burst, and if so, when?

The people suffering the most are those starting out in life: young couples, newly marrieds, and others trying to get on to the property owning ladder.There are schemes offering reduced prices for local residents, who then are unable to sell for a certain period (5 years). It should be noted, however, that such schemes do not prohibit buy-to-let. So, I do wonder if that is actually ensuring the fizz stays in the property market. And I also have my suspicions about how many of these first time buyers are nominees for property dealers.

The bottom line: there does not seem to be an effective plan to take the heat out of the property market.

Read the whole Globes piece here.