Post-Covid: Housing Prices in Israel
A few months into the virus outbreak, Israel real estate finally slowed down. Many felt insecure because of the situation and refrained from buying or selling, but it didn’t last long. After a short period of time, the real estate bubble started growing again with all its might. As stated at the Central Bureau of Statistics, prices went up drastically, rising by an average of 10% in just a year.
Did it stop the Israelis from buying properties? The opposite is true. According to data published by the Bank of Israel, Israelis took over 116 billion NIS in mortgages in 2021, an increase of 50% from the previous year. Why? Demand to supply ratio. Each year the demand goes higher, and the government is not keeping pace with supply. Therefore housing prices keep going up, and everyone is aware of that. Today’s high will be next year’s low, and if you have the chance to buy now – don’t delay.
Another reason is high rental pay. In most cases, average rental pay is equal to the monthly mortgage payment. For example, the average rent for a property NIS 2m worth is NIS 5.5k, while the average mortgage payment is 6.3k (70% financing). That’s why for many Israelis, it is still wise to buy and invest into your own property, rather than waiting years or decades for the miracle of falling prices.
Is there any solution? Yes. The best solution to any high demand is to increase supply. However, it is not easy as it sounds. As the Bank of Israel reports, it takes up to 10 years to build an apartment, and sometimes even more. Planning procedures and bureaucracy take more time than the construction itself; therefore, in order to solve the housing prices, changes in the permit process must be made.
What about the non-residents? At first, many of the foreign residents paused with the search, and some even delayed the aliyah. With all the restrictions and regulations that make traveling harder, purchasing property became challenging. While some are waiting for a good opportunity to visit, others prefer buying remotely. Modern technologies, such as video calls, virtual reality tours, Google Street View, and high-quality property illustrations, make the buying process easy and smooth, without leaving home. Such a process is a lot easier with new projects “on paper”.
In conclusion, Israeli housing prices seem to go higher and higher. We see that global inflation, financial crisis, and even pandemic don’t slow the local market, and if it does, it lasts for several months, and then it keep growing. If you’re thinking about the right time to buy – the answer is now, even if your aliyah is 5 or 10 years from now. Our real estate agents will find you the right property, and our lawyers will take care of the legal part.
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