JERUSALEM — Israel is still the third-strongest housing market in the world after losing its number-one ranking to Hong Kong and Taiwan in the second half of 2009, according to the Global Property Guide. Home prices were 15.5% higher in inflation-adjusted terms in the fourth quarter of 2009 than the corresponding quarter of 2008.

Israel is widely seen as the last Western country to fall into recession and the first to resume growth as a result of its monetary and fiscal polices combined with stricter lending-standards that caused the country to avoid the subprime-mortgage collapse.

In related news, the Israeli Consumer-Confidence Index has risen to a ten-year high. The measure rose by more than eight points in the last two months following a 1.1-point decline in December. More than 33% of respondents in a February survey said they plan to purchase durable goods, possibly indicating that private consumption will continue to increase in 2010. Credit-card use also increased 4.8% from 2008 to 2009 despite the recession. (See here for an important difference between Israeli and Western credit cards.)

Unemployment declined from 7.7% in the third quarter of 2009 to 7.4% in the following quarter. Israel has always had an unemployment rate that is generally higher than the United States.

By: Samuel J. Scott