Can we expect a drop in Israel's real estate prices?

The real estate market in Israel has been rising at an impressive rate for decades, just this year a 15.2% increase was reported across the country. (between 03.22 - 04.21 - According to the Central Bureau of Statistics in Israel.)

But most apartment buyers take out a loan, and banks all over the world have raised interest rates in order to fight inflation.

In Israel the basic interest rate defined by the Central Bank of Israel has more than tripled since the beginning of the year.

If it's difficult to take a loan or pay it back, that means fewer buyers which means a drop in demand and a drop in prices.

In fact, see a decrease of about 1.5% in apartment prices in oct' 22. (Estimates)

But it's a matter of time, why?

Real estate in Israel rises in stages, this is not a linear growth. Once in a few years you have some kind of stoppage, this stoppage is always due to a external intervention. For example in the past with the government's intervention in taxation or the covid crisis. In the short term prices went down, but when the crisis was over we witness an increase in demand and a drastic increase in prices. (See first paragraph).

Crises pass, also the current interest rates affect and the opportunity it brings with it will pass.

It is important to understand the market forces here.

• Most Israelis live in an apartment they own. (Estimated about 70% - 80%) and apartment prices have almost doubled in a decade throughout Israel, so most Israelis are very happy about this.

• Real estate taxes are one of the most profitable revenues for the state, since the income is a percentage the increase in prices only magnifies the states profits.

There is a perception in Israel that owning a home is financial stability, you will always have a roof over your head. The dream of every couple and every family is a house they own. Add to that the fact that Jews around the world also want a piece of land and security in the State of Israel and you get huge demand and limited supply. And this is clearly seen in the market.

Even during the crisis, the decline is very small compared to the general growth.

If you would like to explore your options and opportunities in depth, we offer a free consultation with a qualified Israeli real estate consultant. You are also invited to take a look at our new residential project for sale in Jerusalem. Here

* The above should not replace legal or business advice, before any decision you should consult with your lawyer / business advisor.