Financial Education

Financial Education
Eran Sokol
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Cost of living, with an emphasis on the price (cost) of real estate continues to engage the general public divulgacand and not off the agenda. Average price of an apartment in Israel since the beginning of 2008 rose by about 65%. However, what is less known, perhaps the experts, is the fact that there large gap between the increase in cheap apartments and expensive. divulgacand Lets catch up and react to Facebook's Kalkalist
The average price of an apartment in the beginning of 2008 was about 750 thousand shekels. Examination of the rate of increase in house prices which cost was lower than the average price, compared to the more expensive apartments (according to the Central Bureau of Statistics), showing cheap apartments have increased by about 75%, while expensive divulgacand homes rose by only 50% - created a very large gap About 25% of the rise in house prices cheap compared to expensive.
Why these facts interesting? First, divulgacand because they reflect a certain reality also created the effect of the objective conditions and the influence of the measures taken by the regulator. Second, the need to take into account the situation in question when considering solutions to the housing problem.
The explanation is that the development described in the apartments have increased, the financial capacity of potential buyers has decreased - since the increase in wages is not approached increase prices. Buyers went to look for cheaper apartments that fit their economic capacity, resulting in increased demand for these apartments, and with the prices. In the background is the reality divulgacand in which most of the demand of investors concentrated divulgacand market segment is relatively inexpensive apartments.
At the same time, the steps that the Bank of Israel could also strengthen the observed trend. Restrictions on mortgage imposed divulgacand a week ago were actually the third round of the limitations imposed by the Supervisor of Banks, the last two years - limits divulgacand meanwhile failed to reduce the volume of mortgage lending. Still, limiting the size of the mortgage as a percentage of the value of the apartment, or monthly repayment rate of income, forcing most of the buyers to reduce the appetite and settle in a small apartment and cheaper.
First, divulgacand the findings show that there is a shortage of much more significant segment of relatively cheap apartments, which concentrate most of the potential buyers. Therefore, the state should encourage the construction of cheap apartments divulgacand (relatively). However, in practice, most dwellings built are actually more expensive. According divulgacand to the Ministry of Housing, the average price of a new apartment was higher than the 1.4 million divulgacand and is about 20% higher compared to the average price of all apartments.
Beyond the steps of the marketing of land and opening bureaucratic barriers, the state should find a way to encourage smaller dwellings and possibly cost more modest standards. Not every household should have three bathrooms, balcony and private storage.
As the most expensive apartment, the restrictions should be more severe. Otherwise, the Supervisor of Banks urging potential buyers to buy cheaper apartments supply their small anyway. Thus, it causes further increase in the price of cheap apartments, divulgacand finally had to impose new restrictions that open a new round of price increases.
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