Israel Housing Costs
What property can I buy for 1,000,000 shekels?
By: Gad Levy-Golan & Laurie Silverman
While the real estate market waits in anticipation of new housing programs to be implemented after the 2015 elections, two major factors halted the real estate industry in Israel during 2014.
Firstly said Gad Levy-Golan the CEO of Gad Nadlan, Minister Yair Lapid, Minister of Finance had us mesmerized with his plan for "Ma'am Efes" or Zero V.A.T. Young families and newlyweds were going to benefit by not having to pay V.A.T on their first home. The country waited in anticipation for the bill to come through, but it was rejected and many young couples had their bubble burst. As a result, the Real Estate market in Israel saw an immediate growth in the demand for smaller, more affordable apartments across the country.
The second factor, Levy-Golan says, were the anti-Semitic attacks in Europe. "The property market in Israel was awakened by French immigrants (Heb: olim). Our offices were inundated with French olim who moved here in the last year or two and were waiting for the right moment to buy. The French olim responded immediately as did young Israeli couples who were certain that a new wave of French Aliyah would affect property prices and they rushed into deals before a price rise occurred and all attractive 3-4 bedroom apartments would disappear from the market."
December 2014 was one of the most intensive and lucrative months in in the real-estate market in Israel with young couples and first time home-owners taking the lead. Purchases of apartments broke a 10 year record. About 11,000 homes were purchased in December, an increase of 17% compared to November, and an increase of 37% compared to October 2014. January 2015, on the other hand, saw a drop in the value of the Euro which means that the buying power for Olim, who have their funds in Euros, has dropped by about 10%
What can I buy?
In Jerusalem there is a large demand for 4 roomed apartments in the 1.4 -1.6 million shekel range. Neighborhoods like Gilo and Har Choma, although far from the center of Jerusalem, fit this bill. (Note: a 4 roomed apartment in Israel refers to a 3 bedroom apartment + living room).
In Raanana the demand is for 3 or 4 roomed apartments with a price tag of 1.6 to 1.9 million shekels. These prices can only buy older apartments in the center of Raanana, close to Ahuza and mostly in buildings which have undergone the TAMA 38 procedure - structure strengthening against earthquakes.
Brand new apartments in Raanana's Neve Zemer neighborhood are being built. These will sell for 1.9 to 2.4 million shekels but will only be ready in 2016/2017.
Laurie Silverman of Cohen's Real Estate says "Tiberias is a carefully guarded secret and it is mentioned in the same breath with Tel Aviv for real estate investment opportunities and property purchases due to the more reasonable purchase prices and variety of options available. In addition to the amazing scenery, the Anglo community is growing. Tiberias has warm, friendly people and an incredible sense of community throughout the city".
What will 1,000,000 shekels get you in Tiberias? For personal living, family growth and high quality of life there are spacious new and resale apartments – some with fabulous views; penthouses and maybe a 2-family house (Heb: Du Misphachti). In this price range there are fixer-upper properties in good areas - everything included. These types of dwellings are good for investment purposes, but keep your expectations reasonable. With 1,000,000 shekels you can buy several modest long-term rental apartments; or a spacious apartment can be divided for a nice return on your capital.
"The City of Tiberias is nearly 2,000 years old. It is an exciting time to live and work here and watch its growth. The ‘old’ is not being destroyed to make room for the ‘new’, it is being renovated, updated and energized. Property prices in the Tiberias region are commonly dictated by a lake or valley view."
Laurie continued: "My very best advice, for any property purchase, is to take each property exactly for what it is – see passed cosmetic imperfections, evaluate what you can and can’t afford ~ but know with complete confidence that everything is indeed possible!
In conclusion Gad Levy-Golan, says: "The latest trends show that the public has lost confidence in government promises, programs and reforms. The 2015, pre-election promises include dropping prices of land for hundreds of thousands of housing units in high demand areas and in the periphery but, most likely, this will also dissolve in the next government budget, and prices in the cities between Hadera to Gedera will just continue to rise.
Properties with a 1,000,000 shekel price tag
As a guideline for new buyers, we found a selection of properties online, offered by highly regarded realtors, which closely fit our 1,000,000 shekel price tag. Please note however, that these are not necessarily the average prices for properties in these areas.
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