Tel Aviv Real Estate Market Update | Why You Shouldn’t Be Waiting on the Fence
It’s been a crazy summer here in the Tel Aviv real estate market. Our small city has been the center of the social protests that are occurring throughout Israel, with hundreds of thousands of people both marching in, and living on, the streets, protesting the high costs of housing and the overall cost of living. To make things more complicated for the Israeli housing market, journalists, economists, academics, developers, brokers, bankers, and bureaucrats alike continue to conjecture about the “bubble burst” that no one seems to understand, when, or even if, it exists.
People are afraid to buy now. They read the newspapers, they see the postings on the real estate sites, they speak at the cafes, and on the beach. This is natural, buying real estate being one of the most serious decisions a person will make in their lives. With all the doubts regarding the housing market these days, “maybe it’s best to wait and see what happens” seems to be a popular mantra. The common notion now, is of course, that the prices are high and that between the protests and the press, the prices will imminently fall, for both renters and buyers. To buy, the consensus says, is ridiculous, suitable for only those without a proper grasp of understanding. “The market will fall” they say, “just wait and see!”
Many home owners and investors, of course, are buying into the idea of the market falling, and with the tax benefits that are set to end next year, are ready to jump ship from their properties and homes and are putting them onto the market, with the hopes of maximizing their profits. Many sellers are putting their properties onto the market at highly reduced asking prices, looking to make a quick deal. In the last month apartments in the center of the city have been put onto the market ranging anywhere from 19.000 – 25.000 NIS per meter, up to 15% below market value. The average buyer in Tel Aviv, however, as stated above, has no interest in the prices the sellers are asking, no matter how low they may appear to be. They refuse to be suckered into someone else’s wallet. They know, ever so well, that the prices will fall and that if they can wait a few months.
This logic, unfortunately for the average buyer, is a bit flawed. Apartments are still being sold, and are continuing to fetch in excess of 25.000 NIS per square meter. Tel Aviv is an international city that people want to live and invest in, and no social protest can change that fact. The center of Tel Aviv, like New York, Paris, London, Berlin, Toronto, and any other major city on the planet, is a city for those who can afford to play. The prices are not going anywhere. Owners have too much to lose, the city isn’t big enough, the Municipality isn’t motivated enough, for that to change. With the reforms put forward by the Israeli Government in Jerusalem, it will take years for new apartments, not located in the center of the city, but rather on the outskirts, to be built. Not to mention that Tel Aviv already has affordable apartments in the outer neighborhoods and the fact that the Government has no hand in the development of the city center. While it is true that he volume of sales is down 16% from before the summer, which accounts for the “fat” being trimmed from the market, real buyers are still buying real properties. Just take a look around. In fact, many owners are even taking their properties off the market, waiting for the average buyer to come around into a buying mood yet again.
Do you want a home in one of Tel Aviv’s plush neighborhoods? A home to last you for the years to come? Do you have the money? Than you cannot afford to wait like everybody else. In a month or two’s time the country will take on a new issue, as it does every few months, and people will return to the market once it is obvious that a few bureaucratic bills passed in Jerusalem don’t equal real change in the real estate market. The Government’s desire to tax the upper classes here and take the tax burden off the middle class will only increase home buying in the long term. What does that mean for you? The prices of apartments in Tel Aviv will return to their previous levels and you will have missed the boat. You’re dream home will not wait for you. If you’re an investor, don’t expect to see properties that will fetch 5% + yields after the next month or two, Tel Aviv will return to a 2% city. Most of the great investment properties were already gobbled up this summer, when it became obvious that foreigners and savvy investors alike were liquidating their assets. If there was ever a time to buy an investment property here in Tel Aviv, today is the day.
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