After a protracted slump in sales, buyers are returning to the Israeli housing market.
The year 2011 had been marked by a statistically significant downturn in sales. Transactions were all but nonexistent during the last quarter of 2011.
After a few years of steep gains in central Israeli cities, why would buyers think prices would retreat, anyway? One reason is the state of the global economy. Israel came out of the serial crises in the last few years pretty well. But inevitably, the weaker the global economy, the more it must impact Israel through depressed demand for Israeli products. The worse the economic situation in Israel, goes the logic, the more home prices are likely to drop.
But the more significant reason had been the growing awareness of the Israeli consumer, as evident in last summer’s cost-of-living protests.
The high cost of housing in Israel was a key driver of the protest movement. As tents popped up like mushrooms on city squares and tree-lined plazas up and down the land, Jerusalem scrambled for ideas, such as freeing more land for development. But by the nature of things, solutions addressing the supply-side of the housing market will take a long time to impact pricing.
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