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·    The Research Department is holding a conference today, in collaboration
with the Sapir Forum, on “Housing Market Issues”

·    At the conference, research conducted at the Bank of Israel Research
Department, as well as external research, was presented. Prof. Rachelle
Alterman from the Technion addressed the conference, and there was a panel of
experts from the academic world and public-sector policy makers for a
discussion on policy issues.


conference by the Bank of Israel Research Department in collaboration with the
Sapir Forum was held today in Jerusalem. The conference dealt with various
housing market issues, mostly related to policy that impacts on this market.


Governor of the Bank opened the conference, noting the great importance of economic
research related to aspects of the housing market being professional and
high-quality, and using the most advanced research methods, so that policy
makers have the best data available, which is necessary for making informed


process of creating the supply that will provide a response to demand is long
and complex, and the government has a major role in this, as it is the owner of
most of the land and is responsible for the planning and licensing process,
both in regard to various aspects of regulatory policy, and in regard to taxation
policy. The Bank of Israel also has a role in the real estate market, in its function
as the supervisor of banks, which are the main source of financing for the
market, and in its role in maintaining the financial stability of the system.
In this regard, in recent years we took several steps to reduce the
macroprudential risk, against the background of the increase in scope of
housing credit. These factors make the real estate market very complicated, and
one that requires informed policy—which is where another Bank of Israel function
comes into play, as economic advisor to the government. In that role, we
examined various policy measures and assessed their impact on the housing


·     We recommended bringing in foreign construction companies, which will
bring with them advanced construction methods and will improve the productivity
in the industry, and at the same time, we expressed our opposition to importing
foreign workers, as cheap labor reduces the incentives for increasing
productivity in the industry.

·     We recommended to increase the scope of land available for building in
areas of strong demand and to create a stock of available plans for future

·    We noted the need for higher density building in cities (via
vacate-and-build projects) and for building appropriate infrastructures, such
as public transportation systems

·     We also noted the necessity of shortening the length of time from
construction planning to actual start of building.

·     We presented research findings on housing affordability—which troubles
us mainly in view of the prolonged increase in home prices in recent years

·     We assessed the scope of demand for homes in the market based on
demographic developments, and more.”


research by the Bank of Israel’s Nitzan Tzur-Ilan was presented, which examined
the effect of mortgage loan to value ratio limitations on households’ decisions
when buying a home. The research found that households on whom the loan to
value limitations were imposed on the loans they took, chose, after the
limitation was imposed, housing assets that were less expensive (in real
terms), further from the center of the country, and that were in neighborhoods
with lower socioeconomic rankings. Presentation


research, by the Bank of Israel’s Itamar Caspi, presented an econometric test
to examine the behavior of home prices over time, which was implemented on data
for OECD countries. The research found that we cannot negate the hypothesis
that in recent years, home prices in some OECD countries behaved in a manner
than from an econometric perspective would be defined as explosive. Presentation


Bank of Israel’s Dana Orfaig’s work found that the impact of monetary interest
rate shocks on home prices is relatively low, as was found in similar research
worldwide—a negative shock of one percentage point in the interest rate leads
to an increase of about one percentage point in real home prices. Presentation


Nagar from the Bank of Israel and Doron Sayag from the Central Bureau of
Statistics presented a hedonic index for land prices in Israel. Presentation 


address by Prof. Rachelle Alterman from the Samuel Neaman Institute at the
Technion dealt with problems and challenges of housing policy in Israel,
presenting a view of the housing market from the outside looking in. Presentation


the afternoon session, Ofer Raz-Dror from the National Economic Council
presented his research, which examined the effect of National Outline Plan
(NOP) 38 has had on home prices. He found that NOP 38 contributed to an increase
in prices of homes that were able to be renovated within its framework and that
the effect in the center of the country was greater. Presentation


Bank of Israel’s Elad Demalach presented a joint paper with David Genesove and
Asaf Zussman from the Hebrew University and Noam Zussman from the Bank of
Israel, which examined the effect of proximity of cellular sites (antennas) on
home prices. Their research indicates that there is not a statistically
significant effect of cellular sites on home prices. Presentation


conference concluded with a panel moderated by the Director of the Bank of
Israel’s Research Department, Prof. Nathan Sussman, ​and with the participation
of Dr. Danny Ben-Shahar from Tel Aviv University, Prof. Omer Moav from IDCHerzliya, andMr. Eran Nitzan, Deputy Budget Director at the Ministry of Finance. The panel discussed central questions
related to housing market policy.