Israel's Real Estate Market 2007

The real estate boom that began three to four years ago in Jerusalem neighborhoods near the center of town has spread to the entire city.

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Baruch Finkelstein,

Looking back

If you purchased a house in any Jerusalem neighborhood in 2006 and then sold it in 2007, you made profit. The real estate boom that began three to four years ago in Jerusalem neighborhoods near the center of town has spread to the entire city. Even periphery neighborhoods have seen price increases; the prices of homes in some neighborhoods hiked drastically. For years prices in neighborhoods such as Har Nof, Ramot, and Pisgat Zev have either stayed the same or rose only slightly. But in the last year, money that could have bought a four room apartment is now only enough for a three room apartment. Real estate in Jerusalem – all Jerusalem – is hot, and it’s not only because of foreign buyers.

 

In his column in the business section of Yediot Ahronot (Prices in the sky, December 25, 2007) Ofer Petersburg reported that in the last year the average price of a house in Jerusalem went up from anywhere between 20 to 40 percent. In 2006 the standard four room Jerusalem apartment cost $250,000. Now it stands at $350,000.

 

Taking a look at the market on the national scale, we find similar trends in most Israeli cities. Tel Aviv is as attractive as Jerusalem, with prices having risen from twenty to forty percent. Other cities that have also seen a rise include Bat Yam (25 percent increase), Ashdod (20 percent), Ramat Gan (20 percent), Raanana (15 percent), Shoham (20 percent), Netanya (15 percent), and Modiin (5 to 15 percent). Some cities however, were not swept up in the real estate boom. Prices have remained the same in Beer Sheva, Or Yehuda, and Afula. While there were hopeful expectations for Beer Sheva, the optimistic predictions have not yet come true. In some cities prices decreased, like in Haifa, where prices decreased by 15 percent. A four room apartment in Haifa  overlooking the Mediterranean can be had for $155,000. Tiberias is down by seven percent as is, Hedera, where a four room apartment goes for $105,000.

 

Looking Ahead – 2008

Most experts believe that the overall upward trend will continue. In an article that appeared in Makor Rishon (Summary of Real Estate 2007, December 5, 2007) Shir Lavi quoted the optimistic predictions made by my colleague Bernard Raskin, president of ReMax Israel. “The prices in the desirable areas have not yet reached the top.” The reason for Bernard’s optimism is simple. All the causes for the sudden increase still exist. Employment is up. The high tech industry is strong. Foreign interest in the market is only expanding. Two years ago American and French investors were the main targets for sales; today the list has expanded to include the Jewish communities of England, Belgium and even Italy. In February, Rome and Milan will host their first ever Israeli real estate fair. Only some unforeseen circumstances can potentially bring prices down.

           

I do not share Ofer Petersburg’s long term cynical view for the nation’s capital. He mentioned in his article that he foresaw an eventual decline and even depression in Jerusalem since he sees many non-religious residents moving out of the city, leaving it to foreigners who only come to Jerusalem for vacations and to the more indigent haredim (Utlra Orthodox Jews). I do not agree with Petersburg’s assessment. The city is flourishing, the malls are thriving, rentals are almost impossible to find. Even if people are leaving the city, Jerusalem seems to be getting more and more bustling. The foreign investors purchasing homes in Rechavia and the German colony are not disconnected investors. They are Jews committed to Eretz Yisroel and will probably make aliya one day, or more likely, their children will make aliya and live in those homes. Purchasing a home is just one step closer to their Zionistic commitment to live in Israel.

 

The prices in Jerusalem will continue to go up, not only in the more desirable areas but in the whole city. I am confident that we are in the midst of seeing the fulfillment of the prophecy of prophet Zecharia (8:2-5): “Jerusalem shall be called the city of truth… And the streets of the city shall be full of boys and girls playing in the streets.”

 

Baruch Finkelstein is an owner/broker of Remax Center in Jerusalem. The office is in the shopping center of Ramot and Baruch has agents that service all of Jerusalem.
cell: 972-545-251-219
office: 972-2-586-9980
baruch.finkelstein@remax.co.il