According to the UBS Global Real Estate Bubble Index 2022, a bubble has developed in the Tel Aviv housing market. This is the first time that Tel Aviv has entered the index as one of the 'bubble risks,' and a market where there is a serious risk of a significant downward correction in prices in the near future.
This is the first time Tel Aviv has been deemed a bubble risk since UBS researchers began publishing the annual report in 2015.
UBS writes, "Nominal house prices in Tel Aviv have roughly tripled between 2001 and 2017. Rents almost kept pace with the price increases, reflecting a fundamental housing shortage. Higher mortgage rates and stretched affordability did cause a brief period of correction, but by 2019, the market was back in another explosive phase of price growth. Between mid-2021 and mid-2022 alone, prices climbed by 18%, the highest rate since 2010. And outstanding loan volumes shot up by 18% as well, the fastest pace in 25 years. Consequently, the market ranks in bubble risk territory. A discussed relaxation of the maximum loan-to-value ratio for first-home buyers would heat up the market even more. However, the probability of a sharp but short-lived correction is high, if mortgage rates rise further."
With a mark of 1.59, Tel Aviv is ranked as the world's eighth highest bubble risk after Toronto, Frankfurt, Zurich, Munich, Hong Kong, Vancouver and Amsterdam. After Tel Aviv, Tokyo and Miami round out the top ten bubble risks.
Published by Globes, Israel business news - en.globes.co.il - on October 12, 2022.
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