Over the past ten years or so, the Israeli real estate market has repeatedly experienced both price increases and price reductions. However, the situation can be figuratively described as follows: a step backwards and two steps forward. On real estate prices today and forecasts for the future – in our review.
Let’s start with the story: 1999 brought the market a 12% price increase. The subsequent weakening of the Israeli economy has somewhat cooled the market. Housing prices in the whole country, according to the Central Statistical Bureau of Israel, fell from October 2000 to mid-2003 by 6.5%. However, in the future, the decline was won back due to a stabilized economy, and in the first quarter of 2006, prices rose by 28%. In July 2006, Israel began hostilities in southern Lebanon. Their result for the real estate industry was a decline in value by 11.6%.
The year 2007 became ambiguous for Israeli housing. In some regions, such as Haifa, prices have declined. At the same time, in Tel Aviv and Ashdod, they showed an increase of 20-30%.
The results of 2008 were of great importance for the abolition of visas for Russian citizens in September. Already in the fourth quarter, realtors noted an increase in interest in Israeli real estate. In general, by the end of the year, prices for apartments grew by 11%. During 2009, Israeli real estate continued to ignore the global economic crisis and went up, according to various sources, from 14% to 19%.
In the first quarter of 2010, the average cost of apartments in relation to the previous quarter. According to the Central Statistical Bureau, it grew by 2%, according to the Ministry of Finance, it fell by a similar amount.
Today, the main buyers of Israeli housing remain Russians, French, British and Americans.
Real estate prices today
According to the apt expression of one of the realtors, to indicate the average price of housing in the country means to name the abstract value of a non-existent property in a non-existent city. Prices vary considerably depending on the city, district and even home. On average, the cost of a very good real estate starts at $ 500 thousand. However, much depends on the location. For example, in Ashdod a two-room apartment of about 70 sq. M. m can be purchased for $ 350 thousand, a new house – for $ 700 thousand. In Haifa, prices can be three to four times lower. But for apartments in Herzliya and a million (US dollars or euros) is not the limit.
Which region to choose depends on personal preferences and purchase goals. Tel Aviv is the second most populous in the country and the largest on the Mediterranean coast. However, this is quite a noisy city with eternal traffic jams, so it is not suitable for recreation. But the housing acquired here is not difficult to rent.
Similarly, a favorable rental can be counted in Ashdod. This is an important regional industrial center. Many Russians live here, newspapers are published for the Russian-speaking population and “our” restaurants are open. The value of local real estate and gives the yacht club. An interesting feature of the market is the lack of primary housing. True, this does not mean low quality objects. Almost all of them are fully landscaped and boast designer interiors. If the location in the city itself does not matter, for example, a three-room cottage with a plot of land in the village of Gann Yavne, five kilometers from Ashdod, can be purchased for only $ 260 thousand.
North of Tel Aviv resorts are Herzliya, Netanya, even higher on the map – Haifa. Common among them, perhaps, is only the location on the shores of the Mediterranean Sea. Netanya is the largest Israeli Mediterranean resort, exceeding all other cities in the length of its beaches. The resort is smaller, but at the same time one of the most prestigious places in Israel is Herzliya. She is also called “the rich sister of Tel Aviv”. The elite part of the city is the coastal region of Pituah, called the “village of millionaires”. There are many villas and magnificent private mansions. Real estate at more affordable prices can be found in Haifa – the northern capital of Israel. In addition to the beautiful clean beaches, the dignity of the city is the largest national park in Israel – Carmel.
The uniqueness of Israel is its location, more precisely the access to the three seas. Excellent rest, in addition to the Mediterranean and the Dead Sea, guarantees the coast of the Red Sea. The Eilat resort located here is interesting for its climatic features: due to the dry air, the local heat is transferred relatively easily. Real estate here is quite expensive.
And finally, Jerusalem is the capital of the state. Real estate here can be interesting due to the location of government offices here, either a huge number of historical and architectural monuments, or for religious reasons – this city is considered holy by both Jews and Christians and Muslims.
The best way to characterize the regions is one Israeli proverb, says Mikhail Lerner, the owner of Lerner Real Estate Agency. It reads: Jerusalem is praying, Haifa is working, Tel Aviv is having fun, Eilat is resting.
|City||Apartments about 100 square meters. m, $ thousand||Houses 150-160 square meters. m, $ thousand|
Commercial real estate is not so often put up for sale, rental of premises is more common. All offices have been bought out, there are not enough restaurants and shops. It is difficult to unequivocally answer how much such objects cost: the price is influenced by many factors – from location to the presence of regular customers and the wishes of business owners. For example, in the same Eilat, the price range for hotels ranges from $ 3.9 million to $ 130 million.
Land prices for construction are also not uniform for all lands. For example, in Ashdod for $ 333 thousand you can buy 260 square meters. m, and for almost the same amount – from $ 300 thousand – already 490 square meters. m in Eilat.
In addition to stability, the Israeli real estate market has another attractive feature – the ability to get a mortgage (mashkantu). And on very interesting conditions. To date, banks issue loans of up to 70% of the cost of housing. However, the size of the down payment and the rate depends on the term of the loan. For example, a loan for five years is issued at 2.5% per annum, at twenty – at 4%.
Rent: rent and rent
Short-term rental housing in the resorts is about $ 100-150 per day. If this is a luxury penthouse with a private pool or an elite villa by the sea, for example in Eilat, then the rate rises to $ 300 per day. The cost of renting commercial real estate , for example, an office in Ashod, an area of 80 “squares” will be $ 2.4 thousand per month.
In the calculation of renting acquired housing is better to focus on the coast. With the right approach, you can really earn $ 3-4 thousand per month. On average, the yield is 4.5-5% per annum.
Expectations and forecasts
When asked about the prospects of the real estate market, realtors like to quote the Forbes magazine rating, according to which Israel is recognized as the most promising country for investment. At the same time, factors such as economic stability, inflation rate, availability of bank loans and the quality of housing construction in major cities of the country were taken into account.
Analysts of the portal Isravip.com are confident that in the central cities of the country, primarily in Tel Aviv and Herzliya, the investment will pay off. One of the reasons for the rise in prices was and will be the internal policy of Israel on the abolition of subsidies for settlement on the outskirts. As a result, local residents are drawn to central cities, and domestic demand will at a minimum maintain prices at the existing level.
You can buy any property in Israel – Igor Kuznetsov, director of RE / HOUSE Elit is sure. Guaranteed profits will bring primary real estate, especially at the initial stage. At the end of construction prices will rise by 20%. Until now, according to the expert, it was worth acquiring commercial objects. So, in Ashdod, the rise in prices for them was up to 25-30% annually.
Rising housing prices can be predicted on the basis of insufficient housing supply. Although the Israeli Ministry of Construction is attempting to reduce prices by increasing the number of land plots for sale, the demand for built housing is large enough.
Despite favorable forecasts, the Bank of Israel’s intention to tighten credit policies to prevent a bubble in the market may influence prices. In particular, it is planned to raise the mortgage rate by 1-1.5% if the loan is granted for a maximum period of 70 years.