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Why now is the time to buy real estate in Israel

More and more people are investing in the real estate market in Israel with each passing year. Here are the reasons why you should too

Tel Aviv, one of the most desirable areas in Israel
Tel Aviv, one of the most desirable areas in Israel

Israel is a mixed bag of history and magic, it is a multitude of cultures, and of course, it is the home of the Jewish people. Israel is also ranked very high on the Happy Planet Index, an indicator of human well-being. Each year, all of the aforementioned attract more and more people who desire to buy a home in the holy land.

The Israel Central Bureau of Statistics has recently announced that the housing cost index has decreased over the last few months. Since, many clients have asked me if now is the right time to buy real estate in Israel. Generally, my overarching answer to the question of whether or not one should buy real estate in Israel remains, “Yes.” And, if the market trends indicate a slowdown, my answer shifts to, “Absolutely.”

Here are some of the reasons why:

1. Increasing demand/limited supply

Israel is a small country. It has a limited amount of land and space. Not only that, the amount of land that is free for building or construction is narrow, as 93% of Israeli lands are owned by the government or governmental bodies, leaving only 7% unmonopolized and private. This has created a situation where the supply of housing and the allocation of lands is short. 

On the other side of the spectrum, the demand for new homes is racing upwards. The main reason is the growth in Israeli population, which was 5.9 million in 1998, and now stands at a whopping almost 9 million. And this number is expected to keep growing.

Another prominent reason for this increasing demand is the unparalleled increase of olim (immigrants) moving to live in Israel, for various reasons (Zionism, geopolitical, and other) and foreigners who wish to buy a home for investment purposes, or in order to have a place to call their own when visiting Israel. 

Israel’s population (1949-2015). Source: Wikipedia

2. A stable and solid investment

The real estate market is a volatile one, and the reasons for its increases and declines include various factors, both at the micro and macro levels. 

So aside from the likelihood that the value of your home in Israel is to keep going up, in a volatile market, what you also seek for your investment is true stability, especially economical stability — the kind of economical stability that Israel can offer.

One indicator for such economic stability appeared in a publication from early August, when the global rating company S&P announced that it had upgraded Israel’s credit rating to its highest level in history, AA-, and introduced Israel into the prestigious “AA Rating Club,” which includes an exclusive list of strong economies, such as Belgium, Britain and the United States. S&P’s announcement joins additional announcements published this year by the Israeli government, the Bank of Israel, and other international bodies regarding the strengthening of the Israeli economy, including a report by the OECD published earlier this year that praised the Israeli economy, noting that it continues to perform exceptionally well, with strong growth and financial robustness that is expected to lead to a fifteen-year growth cycle.

3. History’s teachings

Israeli housing prices have been predominantly on the rise for the last 40 years (the last 10 years have seen major growth). Israel, at its creation, was essentially no more than sand and swamps. Throughout the years, the country has changed its face many times, and has developed into the world’s technological hub, has amassed the largest number of scientists and engineers per capita, has flourished into somewhat of a melting pot rich with cultures, art, cuisine, and architecture, and has brought visitors from all over the world to tour its beauty countrywide, more and more each year — all of which have pushed and continue to bolster the cost of real estate.  

Israel’s House Price Index (2008-2010). Source: | Israeli Central Bureau of Statistics

The question of when the right time to purchase or invest is remains a popular query among those considering it, including both specialists and potential homeowners. The upward trending of prices in the Israeli real estate market, especially in the last ten years, and the uninterrupted increase in demand, leads us to the answer — strike while the iron is hot; as the history of the Israeli real estate market has taught us — the longer you wait, the higher you pay. Any slowdown in the increase of prices is a blessing, which presents a time-limited opportunity to buy. Remember, there is only one Jewish state, only one Jewish home for the Jewish people, and there are no plans to construct another any time soon.

This article was written by Adv. Roie Kaner, a real estate specialist and the CEO of Montefiore Real Estate Group, Israel’s leading one-stop-shop real estate firm, which specializes in catering to international clientele and Olim.

To contact Montefiore Real Estate Group, click here.

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