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Housing bubble warning for Israel courtesy of the IMF

The latest annual report conducted on Israel by the IMF is indicating that the real estate market in Israel is one of the most overpriced in the world. According to the report, housing prices have rising 80 percent in the country since 2007. Housing prices are currently 25 percent above equilibrium value. The IMF cited two reasons for the housing bubble; housing shortage as a result more immigrants coming into the country and a lower interest rate environment.  Furthermore, the IMF is predicting that the probability of housing prices falling 10% over the next 5 years is 20 percent. A housing bust could have severe impact on the Israel economic and potentially lead to a recession.

If you want to learn about the situation in Israel, click the following link-Report.