"Taking an international perspective, home prices in Israel have indeed risen substantially since 2008, but on an international comparison we are not exceptional," Governor of the Bank of Israel Karnit Flug said today at a session of the Knesset Finance Committee on housing prices.
"The reaction on the supply side to the rise in home prices was very slow," Flug continued, "We reached a rate of housing starts of 47,000 annually only in 2011, and housing completions reached this level only in 2015. Only now has supply caught up with the annual rate of demand, and meanwhile a gap has opened up - that is where the fundamental solution lies.
"The solution to the housing problem is supply, supply, and supply. We have recently seen the stock of homes for sale reach a peak. When these homes are sold, that will have an impact on prices," Flug said.
Flug also commented on the new measure of bringing in overseas real estate companies: "Output per worker in Israel's construction industry is among the lowest in the world. Bringing construction companies from overseas is a step in the right direction," she said.
Published by Globes [online], Israel business news - www.globes-online.com - on November 14, 2016
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