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Israel: Selected Issues

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  • International Monetary Fund

Abstract

This Selected Issues paper reviews the housing market in Israel. Property prices in Israel are currently about 25 percent above their equilibrium value, owing largely to low mortgage interest rates and supply shortages. Nominal housing prices have risen by 80 percent since 2007. In response to the global financial and euro area crises, the Bank of Israel engaged in two rounds of monetary easing. The monetary stimulus supported economic growth, but it also boosted demand in the mortgage and housing markets. The risk of a sharp correction in housing prices, while mitigated by the supply shortages, remains a concern and could have important macro-financial implications. To contain such risks, macroprudential policies should be further tightened. At the same time, concerted efforts should be made to alleviate supply-side constraints.

Suggested Citation

  • International Monetary Fund, 2014. "Israel: Selected Issues," IMF Staff Country Reports 2014/048, International Monetary Fund.
    • Handle: RePEc:imf:imfscr:2014/048
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    1. Erlend Nier & Mr. Luis Ignacio Jácome & Jacek Osinski & Pamela Madrid, 2011. "Institutional Models for Macroprudential Policy," IMF Staff Discussion Notes 2011/018, International Monetary Fund.
    2. International Monetary Fund, 2012. "Israel: Financial System Stability Assessment," IMF Staff Country Reports 2012/069, International Monetary Fund.
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    Cited by:

    1. Nitzan Tzur-Ilan, 2017. "The Effect of Credit Constraints on Housing Choices: The Case of LTV limit," Bank of Israel Working Papers 2017.03, Bank of Israel.
    2. Nitzan Tzur-Ilan, 2018. "LTV Limits and Borrower Risk," Bank of Israel Working Papers 2018.12, Bank of Israel.

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