The Israeli index of leading economic indicators, called "Hameshulav" in Hebrew, fell 1.2 percent in January - the sharpest monthly drop ever. And in the last quarter of 2008, the GDP contracted by 0.5%, which means that the economy is in recession. But despite these depressing figures, real-estate prices are expected to rise during the coming year because while demand is falling, supply is falling faster.
Housing starts are at a minimum, and according to figures released by the Association of Contractors and Builders in Israel (ACBI), the supply of new apartments will dry up by September or October of this year.
"The supply situation is nothing less than catastrophic," ACBI general manager Yossi Gordon told The Jerusalem Post recently. "The number of new apartments available to the general public is at on all-time low and falling. Housing starts have been falling for the past five years, and I very much fear that housing starts this year will be at the low end of our expectations and hover around 20,000 units.
