Buying real estate in Israel?

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Is it a good time to buy a property in Israel in 2024?

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property market Israel

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 offers, today, a lot of stability to investors


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.

You probably know it already, Israel is very stable. The last Fragile State Index reported for this country is 42.6, which is an outstanding number.

Israel has a strong and stable economy, with low inflation and a high level of foreign investment. Additionally, its well-established legal system provides investors with reliable protection of their investments.

Next, let's assess the economic projections.

Israel will see substantial development


Before buying a property, see how well the country's economy is doing.

As per the IMF's forecasts, Israel is likely to finish 2023 with a growth rate of 2.9%, which reflects the country's forward momentum. As for 2024, we're talking 3.1%.

Besides that, the economy will keep growing since Israel's economy is expected to increase by 14.4% during the next 5 years, resulting in an average GDP growth rate of 2.9%.

The expected sustainable growth rate in Israel is a good thing for someone who wants to invest in real estate because it indicates that the economy is healthy and growing, and that real estate prices will likely increase over time. This makes it a good long-term investment that can provide a good return on investment.

That being said, there are other indicators to monitor.Israel gdp growth

Israeli business owners keep demonstrating firm belief in the economy


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 24 for Israel. This is a really strong score.

12 months ago, the score was even stronger, it registered at 27.

Strong business confidence among local businesses in Israel holds promising prospects for property investors. It reflects a positive outlook on the country's economy, leading to more job opportunities and higher incomes. This optimistic environment boosts the demand for properties, making it an advantageous time for investors to generate rental income and potentially benefit from property value appreciation in the long run.

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buying property foreigner Israel

Israel is issuing a lot more building permits


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 2024.

Israel’s property prices have gained almost 20% in 18 months


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.Israel housing prices real estate

Everything you need to know is included in our Israel Property Pack

Israel's population is getting richer


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.

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 2024.

Rental yields are not high in Israel


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 2024.

Israel rental yields

Everything you need to know is included in our Israel Property Pack

In Israel, inflation is expected to be moderate


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 12.8% over the next 5 years, with an average annual increase of 2.6%.

This data is suggesting that Israel may face inflation in the near future. In such a situation, buying property now becomes an option to consider.

Is it a good time to buy real estate in Israel then?

Now it's time to draw our conclusions.

Without a doubt, 2024 presents an exceptionally opportune moment for property investment in Israel, supported by a collection of highly favorable signals that underscore the country's attractiveness as an investment destination. Israel's well-established stability serves as a solid foundation for investors, minimizing risks and providing confidence in the long-term viability of real estate holdings.

The projection of substantial development in Israel speaks to the potential for significant returns on property investments. As the country actively fosters growth and innovation, the demand for real estate can rise in tandem with expanding economic opportunities, potentially leading to impressive capital appreciation and long-term profitability.

The steadfast belief of Israeli business owners in the economy further strengthens the investment climate. A confident business environment often translates to economic resilience and can contribute to a vibrant real estate market driven by positive market sentiment.

The notable increase in building permits signifies a proactive approach to property development in Israel. This opens up avenues for investors to explore various real estate opportunities, ensuring a dynamic market that aligns with the nation's development goals.

With property prices having gained almost 20% in just 18 months, Israel demonstrates the potential for substantial returns on property investments. This remarkable growth trend indicates a robust demand for real estate, offering investors the prospect of both capital appreciation and rental income.

Adding to the investment appeal, Israel's population is gaining wealth, which can contribute to higher demand for housing and real estate investments. While rental yields may not be exceptionally high, the overall investment landscape is bolstered by the country's stability, growth potential, positive business sentiment, increased building permits, and soaring property prices, collectively making 2024 a highly compelling year to consider property investments 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.

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.

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