From the Ground Up: Maneuvering the Israeli property market

One of the most basic human needs is a place to live – a home. Here in Israel, fulfilling this need has become more and more difficult.

By RAPHI BLOCH
Stone houses in Jerusalem (photo credit: Adi Benzaken)
Stone houses in Jerusalem
(photo credit: Adi Benzaken)
One of the most basic human needs is a place to live – a home. Here in Israel, fulfilling this need has become more and more difficult with the property market looking much like a minefield full of hidden traps and pitfalls.
Almost every day, the press is full of articles about the “housing crisis,” the high cost of apartments or changes of taxation laws or mortgages – all of which seem to make the dream of owning a home feel less than attainable.
The good news is that many can and do negotiate the real estate minefield and find their dream home. In this column, we will visit some of the Israeli real estate topics and issues from the perspective of a realtor. Obviously, there will be figures and statistics, but I also hope to bring the human side, the questions and, yes, some of the answers learned from my experiences as manager of one of Jerusalem’s largest real-estate offices. Effectively, this will be your inside view from someone “on the ground.”
Let’s start by taking a look at the market. Israel is a small country with a growing population so, logically, the root of the “problem” is a simple case of economics – limited supply serving a high and increasing demand. This supply/demand gap widens when broken down into regions. Demand in the Gush Dan or Jerusalem areas is obviously much higher than in the North or South. This is not a new revelation, but what is probably less widely known is that this gap is slowly, but surely, shrinking.
More and more buyers are thinking outside the box and looking for housing options outside their primary search areas. Many small towns and moshavim offer good options for those who can’t find what they need at prices they can afford in the larger cities. Coupled with this is a constantly improving, albeit far from perfect, transportation system that makes commuting a far more realistic option than in the past. For example, many of Binyamina’s residents work in Tel Aviv and enjoy a 40-minute train ride to and from work – that’s less time than sitting in Gush Dan traffic! Similarly investors are realizing that it is possible to make good investments in cities such as Beersheba or Ashkelon as opposed to Jerusalem, Tel Aviv and Haifa and still find good tenants who are happy to rent a property outside the main cities.
Another major influence on the real estate market is the plethora and increasingly complex set of property taxation laws relating to both buyers and sellers in Israel. In general, these laws favor the first-time or single-property buyers and those buying at the lower end of the market and are harsher on multiple-property owners and those buying or selling in the super-luxury market.
As with everything in Israel, real estate is affected by the political and security climate at any point in time, as well as statements made by experts and politicians. These statements or opinions are not always based on fact or objective but, almost always, they create a wave of excitement or more often panic among the various players in the market. In my experience, these knee-jerk reactions tend to pass but what lingers is the feeling of uncertainty and instability, which makes buyers and sellers question themselves and their decisions. It can be surprising how many people rely on comments and rumors rather than facts and their own common sense.
In the coming weeks and months, I will revisit all these issues in more depth along with many other ideas and experiences relevant to real estate here in Israel. If nothing else, 2014 promises to be an interesting year for those in the property market and I invite you to come along for the ride!
Raphi Bloch is the manager of the Re/Max Vision real estate agency in Jerusalem. He previously worked for the Finance Ministry.