Despite global fluctuations, the Jerusalem real-estate market is still going strong.
By JOHN BENZAQUENKiryat Hayovel is one of the city’s still-affordable pockets.(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Markets worldwide experience highs and lows, responding to economic trends, political unrest or market bubbles.So how is it that the Jerusalem real-estate market keeps rising year after year? The government has implemented many measures to try to bring down housing prices, and in some cities these have succeeded. Reducing the bureaucratic red tape and releasing more land to developers over the past few years has definitely increased new construction. In 2013, there were 3,400 new apartments under construction in Jerusalem. The Jerusalem Regional Planning Committee granted 2,660 new building permits, and the Israel Lands Authority released plots for hundreds of additional housing units, mainly in the Pisgat Ze’ev, Har Homa, Ramot and Ramat Shlomo neighborhoods.Unfortunately for the residents of Jerusalem, even this level of new construction is not keeping up with the demand. The ultra-Orthodox population is increasing rapidly due to high birthrates, and the high demand for properties in haredi neighborhoods has caused prices to go up in those areas due to the limited supply. Many investors see this trend and try to purchase properties in neighborhoods that still have “mixed populations” – ones that have not become predominantly haredi.According to Alyssa Friedland, broker/owner of RE/MAX Vision, “the savvy investors are finding investment opportunities in neighborhoods such as French Hill, Arnona, Kiryat Hayovel and East Talpiot. These neighborhoods border areas that have already seen a sizable increase in prices. Many are close to areas that have recently become ‘dominated’ by ultra-Orthodox populations, such as Ramat Eshkol versus French Hill, Ramot and Ramat Shlomo, Kiryat Hayovel and Bayit Vegan. Prices in a non-haredi neighborhood can be as much as 15 percent to 25% lower than a neighborhood that has become religious.”This phenomenon, combined with low interest rates, keeps the Jerusalem market bubbling. Even young couples, who were sitting on the fence after the social protests a few years ago, are realizing that there are “affordable pockets” in the market worth exploring, even on a tight budget. Many first-time buyers also have other government incentives and mortgage advantages, and are therefore getting out of the rental market and into the purchase market. Although foreign buyers are usually limited to 50% financing, Israelis and young couples can get as much as 70% financing from the banks. The prime lending rate is at an all-time low, and even though banks are only allowed to offer one-third of the mortgage linked to the prime rate, this can be the difference between an “affordable” mortgage and one that creates strain for a young family.Many of the older buildings in Jerusalem are going through a process of renewal – either via the “ pinui binui ” program, which entails demolishing the older buildings and putting up new ones in their stead, or the Tama 38 plan, which structurally reinforces the buildings against earthquakes. For the last few years, permits for such rehabilitation have been few and far
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