Likely policy changes will boost Israeli house prices

Subject

Expectations for the housing market in the coming year.

Significance

Under the outgoing government, the state intervened in the housing market to a degree not seen in decades in an effort to check rising prices. That policy has been mostly successful but is coming under pressure from increasing costs and a widening fiscal deficit.

Impacts

• Demand will be supported by a buoyant economy, relatively rapid population growth and doubts about government ability to ensure supply.
• The pace of growth of supply may begin to fall behind demand over the coming months, regardless of policy direction.
• Israel’s heavy reliance on Chinese materials and migrant labour mean construction could be impacted by the Wuhan coronavirus.
• Odds of a new government finding a successful successor scheme are poor given fiscal constraints and a track record of quick fixes.