It's the worry that is playing on the minds of government officials and Bank of Israel economists. When the bank increased interest rates to 3 per cent for June, and when Prime Minister Binyamin Netanyahu recently announced accelerated procedures for approving new builds, they had a single aim: to rein in house prices.
Israel had the third fastest-growing prices in the world last year, with the value of homes rising on average 13.43 per cent above inflation. But the problem is that salaries are only just keeping up with inflation, meaning that housing is becoming less affordable everywhere.
Although last year's house-price increase was unusually high, the decreasing affordability of housing has been a creeping trend over the past two decades and new research by housing analyst Danny Ben-Shahar shows just how significant the change has been.
Dr Ben-Shahar, senior lecturer at the Faculty of Architecture and Town Planning at the Technion Israel Institute of Technology, calculated how many months a household would need to work to pay the value of its house if using its entire net income for this purpose.
In 1989, the figure for the average household was 47 months, but by last year it had risen by 28.8 per cent to 60 months, he found.
Israel had the third fastest-growing prices in the world last year
But in a report on his calculations, Dr Ben-Shahar showed clearly that the change has been far from equal across society.
For the richest tenth of the population, the relative cost of their housing has only increased by 13.6 per cent, while for the lowest tenth it has increased by 56.7 per cent.
In March, Mr Netanyahu acknowledged that slow building and bureaucratic hold-ups by the government were forcing supply down and thus causing prices to rocket, and admitted that there is a shortfall of around 100,000 apartments.
He announced the creation of national housing commissions, which will bypass the planning committee bureaucracy and get building started more quickly. These commissions will be instructed to approve planning for 50,000 homes, he said.
But many economists believe that Bank of Israel intervention can only do so much to cool the market, and fear that Mr Netanyahu's building plan may only be a drop in the ocean of Israel's housing shortfall.
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