Prices continue to edge up in White City Residence with the price per square meter now reaching $18,000 for higher floors.
Those changes are not isolated to that building and are worrying the Bank of Israel that has just decided to further tighten rules for mortgages. Going forward, and in order to prevent a real estate bubble from developing, borrowing will be capped as follows:
- 75% LTV for the first purchase
- 70% LTV when purchasing of a bigger property and selling the first one
- 50% LTV for the purchase a second property within the same family
According to the Bank of Israel, those new rules could affect 20% of mortgage borrowers half of them being investors. This change comes at a time where rates are continuing to go down because of the worldwide economic slowdown. Only this week, the central bank decided to reduce the interest rates by 25 basis points down to 2% in line with the policy designed to establish inflation rates within the target range of 1% to 3 % over the next 12 months. The interest rate cut provides a tail wind for a further reduction in yields in the domestic market, and will probably encourage the continuation of positive developments in the Israeli economy, and therefore continue upward pressure in the property market.
Data from Kerem Israel
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