Amiram Barkat,globes.co.il. 

Real estate prices in Israel are facing a new and significant surge - and this is totally not ours. True, we like to look for the culprit with us, and there is no better time to do it than Yom Kippur, but this time as a guilty window, the contractors are not guilty, and neither is the political paralysis. The power that drives the next price rise is created far from here and has nothing to do with the number of constructions starts or the government's depletion.

Mortgage interest rates in Israel have been declining since the beginning of the year, a slow but consistent decline. The cost of its mortgage has already returned to the lows of 2016, to the days when the Bank of Israel contemplated a quantitative expansion and a lower interest rate, according to the latest updated data released last month by the Bank of Israel. The decline in mortgage interest is the result of the long-term interest rate decline. The most prominent expression of this is the Israeli government bonds, whose prices have risen 20% since the beginning of the year (when the bond price rises, the yield rises). The 10-year government bond yields a little more than 0.8% a year today - the lowest yield ever.

What will it do for the real estate market? Long-term interest rates drop in fuel flow to the engine that pushes up real estate prices. Fuel works twice: first, the cheaper the financing costs - the more profitable investment in assets and projects with borderline returns. Second, the zero return drives investors away from alternative investment channels and pushes them back into the real estate market.

And now to the interesting question - who is to blame for the decline in interest rates. The culprits are the world's major banks, especially those of Japan and Europe, who keep their interest rates below zero and buy their governments' billions of dollars in trillions, regardless of the return they receive. Most European government bonds are currently trading at a negative yield. Hordes of investors who run away with the negative yields are looking for bonds that still give a positive return, like those of the Israeli government.

Even after rising 20%, the Israeli government's bonds are considered very attractive - because Israel is seen as a stable economy and holding its bonds is considered a solid investment of 0.8% per year, which is better than nothing and much better than a negative return.

And so, property buyers and real estate investors in Israel are enjoying a huge global bubble in the central government bond market. The desperate search of investors around the world for a positive return will save hundreds of thousands of shekels and perhaps thousands of shekels, but sheds oil on the real estate fire.