Israel: Selected Issues

February 12, 2014

Preview Citation

Format: Chicago

Israel: Selected Issues, (USA: International Monetary Fund, 2014) accessed November 21, 2024

Summary

This Selected Issues paper reviews the housing market in Israel. Property prices in Israel are currently about 25 percent above their equilibrium value, owing largely to low mortgage interest rates and supply shortages. Nominal housing prices have risen by 80 percent since 2007. In response to the global financial and euro area crises, the Bank of Israel engaged in two rounds of monetary easing. The monetary stimulus supported economic growth, but it also boosted demand in the mortgage and housing markets. The risk of a sharp correction in housing prices, while mitigated by the supply shortages, remains a concern and could have important macro-financial implications. To contain such risks, macroprudential policies should be further tightened. At the same time, concerted efforts should be made to alleviate supply-side constraints.

Subject: Financial institutions, Fiscal councils, Fiscal policy, Fiscal rules, Housing prices, Mortgages, Prices

Keywords: Africa, Council, CR, Deficit target, Error correction term, Europe, Expenditure ceiling, Expenditure framework, Expenditure growth, Expenditure rule, Fiscal councils, Fiscal rules, Global, Government, Government policy, Growth ceiling, House price, Housing prices, ISCR, Mortgages, Policy costing, Price, Property price upswing, Spending envelope, Target rule

Publication Details

Pages:

45
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2014/048
Stock No:

1ISREA2014002
ISBN:

9781475590142
ISSN:

1934-7685

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