In July 2016, Finance Minister Moshe Kahlon declared that Israel’s real estate market was in a bubble that was about the burst. A little over a year later, we’re still waiting for the supposed bubble to burst.

Bat Yam, Israel-May 27, 2016: View on part of the Sea Park huge real estate project. Some cranes work over new high-rise residential buildings on blue sky with perfect clouds background.

Bat Yam, Israel-May 27, 2016: View on part of the Sea Park huge real estate project. Some cranes work over new high-rise residential buildings on blue sky with perfect clouds background.

Kahlon isn’t the first to claim that Israel’s market is in a bubble. The Bank of Israel has warned that the country’s housing market is one of its main threats to financial stability. A report from IMF in 2014 also found that housing prices were 25% higher than their true value, The Jerusalem Post reported.

Kahlon may not have been wrong about the market being in a bubble. But he may have been wrong about the timing of the “burst.” The bubble may not even burst.

The IMF says asset bubbles can either deflate or burst. Deflation would allow prices to come down slowly, while a burst would create a sudden shock.

No one knows for sure how the bubble will pop, but it will eventually – and the IMF says the way it pops may have a significant effect on the economy.

A slow deflation would allow the economy to escape a recession, while a burst would have the opposite effect.

In 2015, top real estate professionals said Israel’s home prices showed no sign of coming down anytime soon. That was before Kahlon took over as Finance Minister.

Kahlon implemented a few programs to combat Israel’s rising home prices, including a program that allows developers to purchase land at cut-rate prices in exchange for selling apartments to first-time buyers at a discounted rate.

Jump ahead to the second quarter of 2016, and housing prices were up 8% compared to the previous year. Prices were up 13% in Tel Aviv. Home prices continued rising despite efforts from the government.

While prices did climb during this time period, they showed signs of tapering off; an indication that the programs may have started doing something to slow the rise in prices.

But thus far in 2017, prices have continued to climb.

A recent report from the Finance Ministry’s head economist showed that foreign real estate purchases were at a 14-year low. In the second quarter of the year, foreign residents purchased 391 homes, a 70% decline from the second quarter of 2015. Foreign real estate investment reached its peak that year, topping off at 1,200 units sold, the treasury said.

Rising home prices are partly to blame for the decline in foreign purchases. According to the Central Bureau of Statistics housing index, prices have climbed 130% since 2008.

Another report from the Gazit-Globe Real Estate Research Institute at the IDC (Interdisciplinary Center) Herzliya showed that housing prices increased by 2.5% in the first half of the year.

Prices were up 1% in the second quarter and 1.5% in the first quarter. Initial reports indicated that prices were up 2.3% in the first quarter of the year.

Although prices are still climbing, the increase in the first half of the year is significantly lower than the 2.1% increase seen in the second quarter of last year. Experts say the market is now in a waiting position.

The Gazit-Globe Real Estate Institute says prices are still climbing in all areas of Israel, except for the south. In southern Israel, prices declined 1.3% in the first quarter of the year.

Efrat Tolkowsky, CEO of Gazit-Globe Real Estate Institute, said, “The market is in the midst of an especially challenging trial. The entire production machinery for housing units in Israel is being systematically diverted. As of now, despite the drop in the volume of deals and Minister of Finance Moshe Kahlon’s buyer fixed price plan, it appears that the prices are still stable, and the trend is not reversing, despite the Ministry of Finances’ efforts and promises.”

Perhaps the trends in Israel’s real estate market have proven that the root cause of the issue isn’t necessarily something the government alone can tackle.