"Housing prices have risen 1.5% in the past three months. Rent in lease renewals are rising by an annualized 3%, indicating excess demand, especially in the central region," Bank Hapoalim economic advisor Prof. Leo Leiderman said at a real estate conference jointly organized by Bank Hapoalim and the Tel Aviv and Central District of the Association of Contractors and Builders in Israel.
Despite the signs of prices rises cited by Leiderman, he added, "Many players in the construction industry are currently sitting on the fence because of the great uncertainty in the sector. There is no doubt that many construction companies, developers, and households are waiting for clear indications of the policy on construction and housing issues that will be adopted by the government formed after the September elections."
Leiderman cited urban renewal as a key focus for solving the housing supply problem and as something that the next government will have to emphasize. "Urban renewal plans constitute an important part of a solution for the housing problem in the central region. In order to carry out these plans, a change in the existing municipal structure and increased investment in infrastructure are needed, while making regulatory adjustments and finding sources of financing for the overall plans. These tasks are not easy; they require planning and coordination between the various players," he said.
Leiderman added that the increase in the number of deals in recent months was one of the indicators of recovery in the construction sector during this period. "The bulk of the sector is move-up buyers, who should be given assistance according to appropriate criteria, just as people eligible for housing are given assistance," Leiderman declared.
Commenting on the mortgages market, Leiderman said, "The number of mortgages continues to rise, although demand is lower than it was in the 2015-2016 boom. Real estate credit, including for real estate companies and mortgages, continues to expand, accounting for over half of the banking system's loans. The number of deals continues to recover, although the focus is on people buying their first apartment, not investors or move-up buyers."
Association of Contractors and Builders in Israel Tel Aviv Tel Aviv and Central District chairperson Yehuda Katav commented at the opening of the conference on the figures published late last week showing a decline in the volume of construction over the past year. He said, "The housing starts figures are alarming. In order to increase the supply of housing and the number of housing starts, the country has to release land for construction on the free market. Bureaucratic procedures and complications on planning committees and in local authorities should be substantially shortened."
Published by Globes, Israel business news - en.globes.co.il - on June 23, 2019
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