Israel's housing market is in for a hard landing despite recent Bank of Israel interest-rate cuts, Global Property Guide says.
"The slowdown has hit," GPG said In a review of the Israeli market, and changes in home prices, rents, home sales, and mortgage interest rates over the past decade.
According to the report noting housing prices fell by 3.27% in the third quarter of 2011, compared with the preceding quarter, when they dropped 0.83%.
The falling prices two quarters in 2011 marked a sharp shift from the 22.4% rise in Israeli home prices in 2009 and 17% rise in 2010.
"Property prices in Israel are expected to continue falling in the coming months, and construction activity is expected to contract sharply," it adds.
According to Globes, the average apartment price was NIS 1,081,100 in the third quarter of 2011.
The sharp rise in Israeli home prices from 2008 to 2011 has raised questions about whether Israel is now experiencing a housing bubble.
Growth from 1999 to 2007 was only 19%, while the Consumer Price Index rose 24% over the same period.
The buyers market comes amid reduced Israeli economic growth projections and a global market turndown.
Housing prices were a primary point of contention fueling the 'social protests' that emerged in Israel during the summer of 2011.