Today, regardless of where you may live in the world, it is generally becoming more and more difficult to purchase a home, and this is no different in Israel. According to data prepared by the Taub Center for Social Policy Studies in Israel, housing is now more expensive in Israel than in 174 out of 175 of large American cities. For example, apartment prices have increased by around seventy to eighty percent over the past few years, whereas wages have only risen by approximately twenty to twenty-five percent.
Rent is also high and on the rise, while the down payment for purchasing an apartment is about forty percent. For example in Jerusalem, where apartments are easily going for around half-a-million U.S. dollars, buying a home is often out of reach for many people. While in Haifa, a two-bedroom apartment can cost upwards of around USD$280,000. According to figures from the real estate company RE/MAX Israel, apartment prices in central Tel Aviv run $5,714 to $7,142 per square meter. In Jerusalem, the peripheral neighborhoods of East Talpiot and Kiryat Hayovel offer housing from $4,285 to $5,714 per square meter. According to RE/MAX figures, two-bedroom apartments in Beersheva, Haifa, Hadera, and Afula cost between $143,000 and $286,000. Mortgage rates are about 4.5 percent, according to Friedland from RE/MAX, but the required down payment is usually about 40 percent. Experts are finding that younger couples are receiving the necessary money from their parents because they typically do not have the savings required for these purchases. As the economist, Daniel Doron noted recently in The Wall Street Journal, “A small apartment can cost the average Israeli worker 12 years in annual salary.”
One primary reason for this surge in house pricing has been the supply shortage for housing, due to low construction volumes. Other factors contributing to this housing boom also include the central bank’s expansionary monetary policies and also the lack of alternative investment options available.
These days, it is essential that people complete their research online and do their research before they consider renting because renting costs have also been on the rise. Fortunately, you can use a home loan calculator to help you estimate your housing costs. Renting an apartment in Tel Aviv would cost you anywhere from US$27 per sq. m. to US57 per sq. m. per month. Renting in Jerusalem is likely to cost you US$19 to US$35 per sq. m. per month. It is essential that you consider the general land prices in an area before making your purchase. This is true for both real estate investors looking to purchase a plot of land, and for the general public.
However, there is good news in regards to the housing market. The Israeli government has put in place and is executing several initiatives to counter the continuing shortage of housing supply. Earlier this year, it passed a motion to double the number of foreign construction workers allowed to work in Israel. The Israeli government also believes that foreign construction companies can also be a solution to the housing crisis in the Jewish state as Israeli construction companies refuse to build new houses due to their worry about a decline in housing prices.