In light of the cost of living and the increase in fuel prices expected to hit us, Prof. Avi Simhon, head of the National Economic Council and economic advisor to the Prime Minister, spoke today (Wednesday) with Anat Davidov and program editor Yael Ilon on Radio 103fm and expressed his opinion on the matter.
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"I don't just hope – I also believe that it will be better," he said. "The increase that was in 2022 was really a crazy increase. The positive side of this issue is that since this government took office – prices have gone down. It's both the government and the interest rate. There's also a matter of expectations, when people don't trust their government and think that prices are going to go up, everyone They run to buy an apartment and that's how the prices really go up. Since this government of Netanyahu started, the opposite process has happened – the people trust him because they know that in the previous years he did manage to control the rise in prices. As mentioned, it's not just the interest rate, it's also the expectations."
Later, he further stated that "What I think will happen is that the prices of the apartments will continue to fall in the coming months, maybe even in the coming year. I don't know if throughout 2024, but I think that the prices of the apartments will continue to fall. The contractors will simply realize that the previous prices are no longer the prices and will start giving Discounts. The faster they realize this, the faster all prices will drop." Regarding the property owners, he added: "The supply of land is not getting smaller. They simply cannot sell the existing stock, so they are not in a hurry to buy more land. We make it clear to the Israel Land Authority that land needs to be sold, if not expensively, then cheaply."
Prof. Simhon referred to the governor of the Bank of Israel, saying: "It's okay to think that maybe his policies are wrong in certain areas. That's perfectly fine, but it should be factual. Criticism should always be factual, even when it comes to the governor of the Bank of Israel. I don't think he should be fired However, and with all the respect I have for the governor, it makes me laugh that when there are failures they say it's because of the Netanyahu government, but when there are successes they say it's because of the governor. In the end, both failures and successes have one father – the government of Israel. The governor of the Bank of Israel has an important role, but He is not the one who moves the economy." And he clarified: "I am not interested in being governor of the Bank of Israel. We, here at the Prime Minister's Office, do not interfere in the governor's interest rate decisions."
When asked about Prime Minister Benjamin Netanyahu, he replied: "The Prime Minister tells the Israel Land Authority, 'You have to sell a certain amount of land and if you don't succeed at the high prices – lower the prices.'" And he emphasized that "everyone says that because of the legal reform, the shekel is losing ground. In the previous government of Bennett and Lapid, the shekel lost more ground than it has lost since the current government came in. The shekel weakened much more before this government was established – these are the facts, these are the numbers." In conclusion, he referred again to real estate prices and expressed optimism. According to him: "Apartment prices will continue to fall in the coming months and even beyond, in the coming year."
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