Israel has handled our recession much better than the United States and almost all Western countries.
While Ariel Sharon concentrated on fighting terrorism during the second intifada, Netanyahu deregulated Israel’s economy and cut spending and taxes.
As a result, Israel’s economy has boomed. Its high tech sector is the envy of the world.
Foreclosures have not been a problem in Israel. Down payments on a home typically run to at least 30% of the price.
Fueled by low interest rates and shortage of new construction, prices are up by 30%, with investors driving the trend. The central banks raising of benchmark rates has had no effect.
The global financial crisis has left Israel’s real estate market with a problem most U.S. homeowners only dream about: Property values are rising too fast.
Fueled by record-low interest rates and a shortage of new construction, average real estate prices in Israel are up nearly 30% since the start of 2009, according to government and industry statistics. Global Property Guide, an international housing trade magazine, recently ranked Israel as the world’s hottest market during the two years ending June.
But rather than celebrate, Israel’s government and banking regulators are racing to pour cold water on the overheated market, worried the trends will spur inflation and lead to financial problems and possibly defaults down the road.