Tel Aviv apartment 311.
(photo credit: Courtesy)
The percentage of households owning more than one home increased nearly 2.5
times from 2003 to 2012, according to a Bank of Israel study released Wednesday,
although recent rules have stymied the trend somewhat.
investors accounted for 3.2 percent of home owners in 2003, that rate rose to
7.9% in 2012, the study found. Yet new rules meant to make investments in second
homes less attractive pushed the rate down about 10% in 2011 and 2012 compared
with the first eight years in the study.
“The decline of the share of
investors in the housing market is still not significant as the state would
like, and it will not make a significant contribution to the lowering of housing
prices,” said Zvi Livneh, CEO of mortgage advisory group Livneh-Ben Canaan, who
cited the historically low interest rates as the main
“Investments in housing have become central for those who want a
relatively solid return of 4% to 7%,” he said. “As long as the interest remains
low, investors will be an inseparable part of the housing market.”
rental yields and interest rates are linked, the study found that when it
separated the effects of each on investors, the rental yield had a greater
As rent prices go up, more investors flood into the field;
each percentage-point increase in rental yield increased the likelihood that an
investor would buy a home by 22%. But every percentage-point increase in the
interest rate decreased the likelihood of an investment by only 8%.
greatest investment demand throughout the entire period was in Tel Aviv, which
accounted for 29% of the purchases. In general, people buying second apartments
to rent out tend to prefer smaller places, which yield higher relative rents,
located in Jewish communities within the country’s center.