Recent inflation data in Israel has led to a significant rise in the Tel Aviv Real Estate Stock Index, which increased by 3.4%. Inflation has dropped sharply to 1.8%, the lowest in nearly five years, falling below the Bank of Israel's target range. Investors now expect a more substantial interest rate cut, potentially reaching 3% by the end of the year. However, experts like Raz Domb from Leader Capital Markets warn that the market's reaction might be exaggerated. Despite the optimism, the real estate market risks overheating as banks and developers keep prices high, potentially inflating a bubble. Housing prices in cities such as Herzliya and Tel Aviv may continue to decline over the next five years, driven by a surge in new construction and an exodus of residents selling their properties.
