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Everything you need to know is included in our Israel Property Pack
Are you considering buying real estate in the land of Milk and Honey? Are you wondering if the prices are adequately positioned?
People have different views on market timing. The Israeli real estate agent you know may suggest that it's currently a good time to buy property, but your childhood friend living in Tel Aviv suggests waiting for a couple more months.
At SandsOfWealth, when we create articles or update our pack of documents related to the real estate market in Israel, we base our work on reliable data and statistics, rather than relying on subjective opinions or hearsay.
We have thoroughly examined all the official reports and statistics available on government websites. Now, we have a comprehensive database of reliable information and we can help you determining whether it is currently advantageous to purchase real estate in Israel.
We hope you find this article helpful!
How is the property market in Israel these days?
Israel currently ensures a stable environment for investors
Positive
If you want to invest in real estate, prioritize stability as it offers a solid foundation for property appreciation and returns on investment. It is an information you need as a foreigner who might buy a property in Israel.
Here's some positive information: Israel is a country with a stable environment. The last Fragile State Index reported for this country is 51.5, which is very good.
Israel ensures a stable environment for investors through its robust technology sector, which is a global leader in innovation and attracts significant venture capital, fostering economic resilience. Additionally, the country's strong regulatory framework and government support for startups and research and development create a conducive environment for investment.
A solid investment potential exists in this country. Now, let's review the economic outlook.
Israel will see substantial development
Positive
Before buying a property, see how well the country's economy is doing.
As per the IMF's forecasts, Israel is likely to finish 2024 with a growth rate of 1.6%, which is promising. For 2025, we're talking 5.4%.
The pace will even accelerate since Israel's economy is expected to increase by 15.3% during the next 5 years, resulting in an average GDP growth rate of 3.1%.
The expected sustainable growth rate in Israel indicates a stable and expanding economy, which can lead to increased demand for real estate and potentially higher property values. For investors, this means a greater likelihood of profitable returns and long-term appreciation in the real estate market.
That being said, there are other indicators to monitor.
Israeli business owners keep demonstrating firm belief in the economy
Positive
The GDP growth matters, but may not fully represent business community's property market expectations. Luckily, in Israel there is a designated metric that is regularly reported. It's not the case for every country, so we're lucky.
Assessing the confidence of business leaders in the current and future economic conditions, the metric called the Business Consumer Index (BCI) is obtained from surveys and assessments.
The Central Bureau of Statistics reports that the Business Confidence Index has reached a value of 17 for Israel. This is a really strong score.
12 months ago, the score was even stronger, it registered at 26.
The robust Business Confidence Index in Israel presents promising opportunities for property investors. This strong confidence indicates a positive economic outlook, resulting in increased job opportunities and higher incomes. Such an optimistic climate enhances property demand, making it an ideal time for investors to earn rental income and potentially benefit from long-term property value appreciation.
Israel is issuing a lot more building permits
Positive
Taking into account the number of building permits issued can provide helpful insights when deciding if it's a good time to buy property in a country. When more building permits are issued, it signifies a buoyant and promising property market.
We have very good news for you: the number of building permits delivered is booming in Israel.
Within the past 12 months, according to Central Bureau of Statistics, Israel, the number of building permits delivered by the Israeli municipalities rose by 24%, from 70,530 to 87,437 units.
This data is clearly telling us that many people think it's a good time to buy a property.
Another important point. There will be more properties available in the market. Based on this data point, it's possible that housing prices will drop in Israel in 2025.
Israel’s property prices have gained almost 20% in 18 months
Positive
Israel's home prices have increased by 39.6% in 5 years according to Central Bureau of Statistics, Israel.
It means that if you had bought an apartment in Tel Aviv for $750,000 five years ago, then it would now be worth around $1,047,000.
The price of Israelian properties continues to witness a relentless increase, with a surge of over 20% occurring in less than a year and a half.
This is a clear positive sign. Property prices have been consistently rising, indicating that there is still room for further growth and they may not have reached their highest point yet.
You can find a more detailed analysis of the real estate prices in our property pack for Israel.
Everything you need to know is included in our Israel Property Pack
Israel's population is growing and getting richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Israel, the average GDP per capita has changed by 9.9% over the last 5 years. It's a good number. Furthermore, the Israeli population is growing (+6% in 5 years).
This means that, if you purchase a stylish penthouse in Tel Aviv and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is expected to increase in Israeli cities such as Tel Aviv, Jerusalem, or Haifa in 2025.
Rental yields are not high in Israel
Neutral
Rental yield is a widely employed tool to assess the financial viability of real estate investments.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Israel is purchased for 2,000,000 ILS and generates 100,000 ILS in annual rental income, the rental yield would be 5%.
According to Numbeo, rental properties in Israel offer gross rental yields ranging from 1.3% and 4.0%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Israel.
It means that your investment won't generate significant returns or income.
Moreover, as we have seen before, there might be a fall in property prices (due to an increase in supply) and more wealthy tenants. Consequently, gross rental yields will probably climb in Israel in 2025.
Everything you need to know is included in our Israel Property Pack
In Israel, inflation is projected to remain minimal
Neutral
In two words, inflation is when prices escalate.
It's when your usual bowl of hummus in Tel Aviv costs 35 Israeli shekels instead of 30 Israeli shekels a couple of years ago.
If you're contemplating investing in a property, high inflation can bring you several benefits:
- Property values tend to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby boosting cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
- Tax advantages, such as depreciation deductions, can help offset the impact of inflation.
Based on the IMF's outlook, the inflation rate in Israel will increase by 1.0% over the next 5 years, with an average annual increase of 0.2%.
This data is suggesting that Israel is expected to have near-zero inflation then. Unfortunately, buying a property now may not lead to significant price increases or high profits in the future.
Is it a good time to buy real estate in Israel then?
Now it's time to draw our conclusions.
2025 is shaping up to be an excellent time to invest in property in Israel, thanks to the country's stable environment for investors. Israel has consistently demonstrated a robust economic framework, which provides a sense of security for those looking to invest in real estate. With the economy expected to grow by 15.3% over the next five years, averaging a GDP growth rate of 3.1%, the country is poised for continued prosperity. This economic stability is a key factor that attracts investors, as it suggests a lower risk of market volatility and a higher potential for steady returns.
The anticipated sustainable growth rate in Israel is another compelling reason to consider buying property there. A stable and expanding economy often leads to increased demand for real estate, which can drive up property values. For investors, this means a greater likelihood of profitable returns and long-term appreciation in the real estate market. As the economy grows, more people will be looking to buy homes, which can further boost property prices and make real estate investments even more lucrative.
Moreover, Israel is actively issuing more building permits, which indicates a proactive approach to accommodating the growing demand for housing. This increase in construction activity can help stabilize property prices in the short term while also providing more opportunities for investment. Despite the recent surge in property prices, which have gained almost 20% in just 18 months, the continued issuance of building permits suggests that the market is responding to demand, potentially leading to a more balanced and sustainable real estate market in the future.
Israel's population is not only growing but also becoming wealthier, which bodes well for the real estate market. As more people seek housing, both for ownership and rental purposes, the demand for properties is likely to rise. According to Numbeo, rental properties in Israel offer gross rental yields ranging from 1.3% to 4.0%, providing a decent return on investment for landlords. Additionally, with inflation projected to remain minimal, the purchasing power of both investors and residents is expected to stay strong, making 2025 an opportune time to buy property in Israel.
We hope this article has been helpful!. If you need to know more, you can check our our pack of documents related to the real estate market in Israel.
-Will real estate prices go up in Israel?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.