The Tel Aviv Real Estate Market: From a Broker’s Point of View | Israel Housing Market Update
Anyone following the Israeli housing market over the past month has heard the hype. “The Israeli real estate market is a bubble!“, they cry, “people are camping in the streets, prices will surely fall next week!”, they write on their blogs and op-eds. Yet you have others who will tell you that the market is intact, prices won’t fall, and that, in fact, they will continue to rise.
We’re real estate brokers, we’re not genies, fortune tellers, or magicians. What we can tell you is what we see from our side of things. Tel Aviv is the center of Israel, period. This is epicenter of business, culture, nightlife, gastronomy, and sport. Indeed, it’s much the center of the entire Zionist enterprise, the first real “Hebrew” city, with a huge significance in the Israeli historical narrative. Everybody wants to live here. The suburbs and their respective micro-economies grow and are sustained by the virtue of their proximity to Tel Aviv. As a general rule, the closer to Tel Aviv you are, the more expensive everything, from housing to a falafel, is. Tel Aviv, like any international city, isn’t cheap. Based on the basic laws of supply and demand, Tel Aviv will continue to be an expensive city for as long as it is the country’s main metropolis, which, despite efforts by Jerusalem and Haifa, it will always remain.
Are housing prices in Tel Aviv, however, higher than the market can sustain? Well, the jury is still out on that one. Over the past month more properties have been coming out onto the market, with sellers fearing that the bubble may very well burst. Prices can be seen dropping a little bit, with definite evidence that the prices have not been rising. As brokers, we’ve seen a number of price reductions over the past month as well, creating a wonderful opportunity for anyone looking for a home. Real estate prices throughout the city have dropped way below the market averages, up to 15%! No one, not even those with the most negative views of the market, see the Tel Aviv housing market dropping this much. Ever.
Our advice? If you’re an investor looking for the next great thing, you surely can find it, albeit with careful consideration and a hard look at the numbers. There are still, today, despite calls for lowering rent, deals to be found in excess of 5% (in a city where the current average floats around 2%). If you’re looking for a home for yourself and/or your family, and you find YOUR home, than go for it. Buying a home for personal use is a long term investment, an investment that will down the road, always make you anywhere from 2-4% per year over the years.
What do you think about the current and future state of the Tel Aviv real estate market? We’d love to hear your comments and questions!