The central bank recommends building more three-room apartments and thousands of flats for rent.
According to the report, the rise in rent prices since 2008 burdens households, mainly due to the housing expense's share in the consumption basket and the high demand for apartments.
The central bank's economists note in their report that "it's important to maintain a diverse supply of apartments for rent at a reasonable price. In this framework, we recommend increasing the apartment supply, including the small ones, in a measured manner and designating them for rent and sale – as part of residential neighborhoods. We also recommend updating social aid for rent."
The Bank of Israel further maintains that direct intervention in rent prices or length is undesirable.
In some countries, however, companies building apartments for rents are given incentives for providing longer rental agreements. Such an incentive can be implemented by allotting some of the land in municipal construction plans for apartments for rent.
The economists note that housing and rent prices began climbing in the first half of 2008, all over the country. "Due to the tough demand for housing and the housing expense's significant share in the consumption basket, the rise in rent prices from 2008 to 2010 burdens households."
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