"Any Future Interest Rate Rise Will Prevent the Construction of 5,380 New Apartments"

"Any future interest rate rise will prevent the construction of 5,380 new apartments"

In response to the Bank of Israel Governor's decision to leave the economy's interest rate unchanged, Raul Srugo, president of the Builders Association, said it was the right decision. In his words, to keep the interest rate from rising again, "the Bank of Israel needs to set a course that begins to lower the interest rate to levels that make it possible to end the stagnation in the construction sector."

In addition, Srugo states that "according to an analysis by the economists of the Builders Association (Bonei Ha'aretz), based on data from the Central Bureau of Statistics, any further increase in interest rates in the economy of a quarter of a percentage point will prevent 1,350 new apartments from being built this year. Rents and mortgage payments will keep rising at an ever-increasing pace, and at the same time about one billion shekels will be cut from state revenue from the construction industry. Any future rise in interest by the Bank of Israel causes the loss of 5,380 new apartments and an enormous loss of NIS 3.2 billion in state revenue (real estate and land taxes)."

Srugo adds that the government must take actions that encourage growth and construction, such as reducing the purchase tax on apartments for investors and encouraging construction for long-term rentals.