Israeli housing market downturn may damage growth

Significance

Record high prices (founded in part on limited supply) and rising interest rates are weighing heavily on Israel’s housing market. Home sales fell by nearly two-thirds over the past 18 months and construction starts have declined by one-quarter in the past year.

Impacts

• Higher mortgage repayment costs may cut into consumer spending, undercutting economic growth.
• High prices and limited land in the centre of the country may drive more buyers to the northern and southern peripheries, and the West Bank.
• Unaffordable home prices may lead to street protests but are less likely to impact eventual elections.