Israel’s real estate industry is dealing with an economic crisis as the country’s property prices have increased 345.7 percent over the last ten years. This data is according to the research by money.co.uk. The incredible surge of costs is considered to be the largest in the world – not even Switzerland (165 percent), Germany (162 percent), and the US (153 percent) came to a close.
To put it in figures, the prices for every square meter swelled from ₪6,875 ($2,145) in 2010 to a whopping ₪30,640 ($9,560) in 2020. It becomes even more problematic as the average wage has only increased by 17.5 percent over the last decade. This makes it difficult for the residents to look for cheaper housing. Furthermore, the rise in real estate prices is even much higher than the average inflation rate increase, which is only 0.92 percent.
The surge in real estate prices in Israel is also reflected in the shortage of apartments. Many analysts say that there is an insufficient number of housing units being constructed in the country these days because of too many investors who are buying properties as investments and the lack of infrastructure resources. Israel’s terrain requires a lot of preparation and work before the construction commences. Without the proper resources, it won’t be impossible to build housing properties. And because there are only a few units available, the prices of the apartments have become steep as well.
According to a study by Tel Aviv University’s Alrov Institute for Real Estate Research, a four-room apartment has an average cost of ₪2,200,200 ($682,608). But the prices also vary, depending on the location. In Tel Aviv, for example, an unaltered four-room apartment can cost, at least, ₪4,000,000 or $1.24 million. Tel Aviv is a progressive city, which explains the high housing prices. But if buyers look for apartments outside the city, a similar type of apartment is cheaper, ranging from ₪1.8 million to ₪2 million ($557,000-$619,000).
In an interview with the The Times of Israel, Danny Ben-Shahar of the Alrov Institute for Real Estate Research revealed that if people intend to purchase an apartment, one must have personal equity of ₪840,000 ($261,140). The sum should already cover the taxes, closing expenses, lawyer fees, and a minimum down payment of 25 percent based on the Bank of Israel rules.
With these factors coming into play, there is no better time to purchase a housing property than now. Although financial constraints and availability of the units can hinder an assured purchase, it is still wise to invest in a property before the prices become even more expensive.