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18 - The Israeli Housing Market: Structure, Boom, and Policy Response

from Part IV - Key Issues in Various Sectors

Published online by Cambridge University Press:  04 February 2021

By
David Genesove
Edited by
Avi Ben-Bassat ,
Reuben Gronau  and
Asaf Zussman
Avi Ben-Bassat
Affiliation:
Hebrew University of Jerusalem
Reuben Gronau
Affiliation:
Hebrew University of Jerusalem
Asaf Zussman
Affiliation:
Hebrew University of Jerusalem
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Summary

The dramatic and continual increase in housing prices after 2008 was a major political issue in this period. Large interest cuts suffice to explain the growth in the price-rent ratio. Rising average income explains most of the growth in rents, which, properly calculated, was also high (though less than that of prices) in this period. Contrary to the general belief, population increase did not play much of a role. Owing to endogenous policy response, housing supply is more elastic than an institutional analysis would suggest. That response, which favoured owner-occupancy over rental, was driven mainly by the salience of the headline housing price index.

Keywords

Housingmonocentric modelprice indicesrentinvestmentbubblemortgage rates
Type
Chapter
Information
The Israeli Economy, 1995–2017
Light and Shadow in a Market Economy
 , pp. 555 - 586
Publisher: Cambridge University Press
Print publication year: 2021

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