In the past six months the Ministry of Finance and the Bank of Israel announced a series of measures which, in their view, should lead to a halt and reduce sky-high prices. It was in particular an increase in certain types of property taxes at a rate of 1 to 2% depending on the market value of the particular apartment. Continuing the recent strengthening of the shekel against the dollar also affected the conditions of payments on mortgage loans. These measures, according to most experts, have been belated and insufficient to change the situation.
Related article: Housing sales are growing in RigaInitiatives economists looked odd in the eyes of the townsfolk. For them, all these actions to curb the housing market looked like tricks of the medieval alchemists. They tried to create gold "from nothing", the Israeli authorities are trying to reduce the prices without having to drastically increase the number of housing under construction.
Even the recently announced plan for Mr. Netanyahu, who was supposed to break down bureaucratic barriers, dramatically accelerate the adoption of decisions on new construction projects and in a short time to saturate the market with new apartments, was unable to reverse the situation. The fact that the market is virtually no reaction to these broadcasts statements of the government, may indicate that buyers and sellers do not believe in the seriousness of his intentions.
On Tuesday, Governor of the Bank of Israel Stanley Fischer announced tough new measure. He decided to limit the size of mortgage loans issued by banks, 40% of the value of the acquired real estate rather than 60%, as it was until now. TheMarker notes that this decision Fisher wanted to let you all on Sunday, but decided to postpone it until after the holidays so as not to spoil the festive mood.
Such a sharp restriction in the amount of the mortgage may have broader implications, the newspaper notes. Indeed, it can lead to a decrease in demand for new flats from the part of Israeli society, which was ready to buy a home even at today's prices. But now, to buy an apartment worth one million shekels (medium-low price today), the family can take mashkantu only $ 400,000 shekels, while the remaining 600,000 to lay out their savings, which is a daunting task, even for wealthy families. The question is whether this measure of the central bank cool down the demand from so-called policy, in particular - foreign investors.
Stanley Fischer decision will not affect directly the current level of prices. But it significantly reduces the risk to Israeli banks be in a situation of their American colleagues, posing huge mortgage loans not secured sufficient conditions for their return. That market collapsed mortgage loans in the United States became the starting mechanism that gave birth to the global financial crisis.