Tel Aviv ranked 8th most expensive place to buy home in report on world’s key cities

Tel Aviv was ranked the world’s eighth most expensive city to buy residential real estate in an annual report on the cost of living in 69 of the world’s most important cities.

The average home in the Israeli metropolis costs $18,469 per square meter, according to Deutsche Bank’s Mapping the World’s Prices report released late last month, which determines the ranking based on the average cost of a home in a city’s center.

Hong Kong took the top spot with homes costing $25,946 per square meter. Israel was ranked behind New York ($18,532), London ($20,953), Geneva ($21,491), Seoul ($22,875), Singapore ($22,955), and Zurich ($23,938).

Israel’s high ranking was due to it “being the capital of a small, but densely populated, country with strict zoning rules and more recently, a booming tech sector.” The capital of Israel is Jerusalem, but many countries and foreign organizations do not recognize it as such due to the dispute with Palestinians over the status of the city.

Successive Israeli governments have for years promised to lower ever-climbing housing prices nationwide. The sky-high costs have put home ownership out of the reach of many Israelis, weakening the middle class.

The Deutsche Bank report noted that prices have jumped 110 percent since 2012, when the average cost was $8,795 per square meter.

Tel Aviv fared better in rankings for the cost of rent, ranking 21st out of the surveyed cities for one-bedroom apartments ($1,667 a month) and 22nd for three-bedroom apartments ($3,088 a month).

New York took the top spot in both rental rankings, with three-bedroom rentals costing $8,388 a month and one-bedroom rentals costing $4,143.

Israel was ranked 28th in the report’s quality of life ranking, jumping three spots since it was ranked in 2020, beating Chicago, and coming in behind Montreal.

Luxembourg was ranked as having the highest quality of life, followed by Copenhagen and Amsterdam.

The result takes into account rankings on safety, in which Tel Aviv ranked 17th, healthcare (20th), cost of living (60th), property price to income ratio (60th), traffic commute time (23rd), pollution (30th), and climate (14th).

In terms of car ownership, Tel Aviv was the third most expensive place to buy a Volkswagen Golf ($47,599), behind Copenhagen ($50,298), while Singapore (140,534) took the top spot in that ranking. Deutsche Bank described the top two cities as “actively discouraging” buying cars.

Israel is often ranked at the top in a list of developed countries with the highest cost of living. More than one-third of Israeli households spend thousands of shekels more than their monthly incomes allow and struggle to make ends meet, while interest rates remain high.

Adding to this, Israeli consumers have been feeling the pain of new tax hikes and higher food, water and electricity bills, squeezing their disposable income and influencing spending habits. On January 1, the government introduced a list of tax hikes to bolster state income and fill a fiscal gap, given ballooning defense and other expenses during the months-long war with Hamas.

Sharon Wrobel contributed to this report.