All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.
Yes, the analysis of Jerusalem's property market is included in our pack
Ever thought of investing in real estate in Jerusalem? You're not alone!
Many people are drawn to Jerusalem's religious significance and fantasize about owning a historic townhouse or a modern apartment there.
Is it worth investing there, though? Are property prices increasing in Jerusalem? Is it expensive? Is it wiser to buy property in the Old City or Talbieh? And the taxes? Where can you get a rental yield above 7%?
We've got it all sorted. No worries.
The SandsOfWealth team has extensively researched this market. Actually, we have condensed all our findings in a pack. Get it now.
In this article, we're happy to share useful information with you.
How is the property market in Jerusalem?
What's the current state of the property market? Data will give us the insights we need.
Property types
In Jerusalem, there are various types of properties for sale to suit different preferences and needs.
These include apartments ranging from cozy studios to spacious penthouses, charming residential houses with gardens, modern townhouses offering a mix of urban and suburban living, and commercial properties like shops and offices.
Additionally, you can find properties with historical or religious significance in the Old City area, as well as new developments in modern neighborhoods.
Whether you're looking for a comfortable home, an investment opportunity, or a unique cultural experience, Jerusalem offers a diverse range of properties to choose from.
Buying vs Renting
(If you want to live there yourself and not rent it to others)
If Jerusalem is your home or the city you plan to call home, you may be contemplating whether it's better to buy a property or rent one in this historic city.
Without a doubt, you should buy if you want to acquire equity in a stable real estate market and have a long-term investment.
One data can help you make a decision - the property price-to-rent ratio. You can think of it as the time it takes for rental income to equal the property's current purchase price.
According to Numbeo, the property price-to-rent ratio in Jerusalem is around 42.94, which is very high.
If the ratio is high, it indicates that buying properties are more expensive in the short term compared to renting. However, buying can still be a viable option if you plan to live in the property for an extended period or if you believe property values will increase significantly over time.
Property prices in Jerusalem
On average, according to the last data from Central Bureau of Statistics, Israel, purchasing a property in Jerusalem would cost you around $7,500 per square meter.
There are significant differences, clearly. The value of a square meter for an apartment in the Old City of Jerusalem might differ from a suburban villa. We actually offer a more in-depth analysis in our pack for buying property in Jerusalem and in Israel.
To give you some context, it means that, instead of purchasing a flat in Manhattan, you can obtain 2 properties in Jerusalem.
Also, housing prices in Jerusalem are 55% cheaper than in Tel Aviv.
The most expensive neighbourhoods in Jerusalem are probably Rehavia, Talbieh, and Arnona, while the cheapest are Pisgat Zeev, Beit Hanina, and Shuafat.
Trends
First and foremost, we have to acknowledge that Israel offers, today, a lot of stability to investors. The last Fragile State Index that has been reported for this place is 42.6.
Consider this when wondering if it's a good investment to buy a property in Jerusalem.
Besides that, if we look at the IMF's GDP forecasts, Israel's economy is expected to soar by 14.4% in the coming 5 years, resulting in an average GDP growth rate of 2.9%.
If you want to invest in real estate in Jerusalem it's a good thing because, usually, when the economy grows, people make more money, and this encourages them to invest in real estate, which drives up the demand and prices for properties.
Also, in Israel, the average GDP per capita has changed by 9.9% over the last 5 years. It's a good number.
This data is a positive signal - housing prices in Jerusalem might soar in 2024 and after that.
Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Israel right now.
Buying property in Jerusalem
Buying real estate in Jerusalem can be difficult due to the lack of reliable and up-to-date information available. That's why we have created the pack to buy property in Jerusalem and in Israel.
Buying process
In our pack, we've explained the entire buying process in detail. We've provided clear information about prices and yields based on the area, guidance on negotiating the price, and options for securing a mortgage.
Now, we're offering you a simpler version, step-by-step, to make it easier for you to grasp.
This is the step-by-step process to purchase a property in Jerusalem:
- Check property ownership through the Israel Land Authority (ILA) and verify property rights.
- Engage a licensed real estate agent with expertise in Jerusalem's market.
- Find the right property and negotiate the price with the seller or their representative.
- Hire a property lawyer in Jerusalem to handle the legal aspects, including reviewing title deeds and contracts.
- Conduct property inspections and appraisals to assess the condition and value of the property.
- Obtain a pre-approval for a mortgage from a local bank, if needed.
- Sign a written purchase agreement (Kabala) detailing terms and conditions with the seller.
- Pay a deposit (Mas-Kabala) to secure the deal, typically 10% of the property's value.
- Apply for a title search (Hevra Meshakenet) to verify ownership history and any existing liens.
- Transfer the purchase funds through the seller's attorney into the seller's bank account.
- Complete the registration process at the Israel Land Authority (Tabu), officially transferring the property title to your name.
- Obtain the new property tax assessment (Arnona) in your name and take possession of the property.
Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Israel.
Make a profitable investment in Jerusalem
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Where to find a property
Start your property search in Jerusalem by exploring these websites.
- BHII - A real estate company specializing in properties for sale and rent in Israel, offering a wide range of options and services for individuals and investors.
- iHOMES - A bilingual real estate marketplace in Israel, offering free listings and searching for buyers, sellers, renters, and flatshares.
- Green-Acres - The leading international second home portal with listings in multiple countries, including Israel.
- OnMap - A platform offering quick, accurate, and specific search tools to simplify the process of finding assets, with a focus on real estate.
- Best Abodes - Find A Property Israel is a platform where you can search for property listings in Israel and place free property adverts.
Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Israel.
What you can get
As mentioned before, the average price per sqm in Jerusalem is $7,500. A 1-bedroom property of 60 square meters would cost approximately $450,000, and a 2-bedroom property of 85 square meters would cost approximately $638,000.
However, the amount you pay for a property can be different based on its characteristics and where it's found.
Housing prices in the top areas of Jerusalem are usually at a premium. A house in Rehavia could come to around $1,420,000, while a condominium in Talbieh might be priced at $800,000.
On the other hand, certain areas are friendlier to your budget. You may find a property in Pisgat Ze'ev for $350,000, or you could locate a property in Neve Yaakov for just $290,000.
Find a more detailed breakdown in our full pack for buying property in Israel.
Risks and pitfalls
Here are the main pitfalls specific to buying property in Jerusalem, Israel:
- Legal complexities due to political situation and differing property laws for Israeli and non-Israeli citizens.
- Title disputes related to historical land claims and religious significance.
- Restricted property purchases in certain areas for non-residents, such as East Jerusalem.
- Cultural and religious sensitivities affecting property usage and development.
- Potential limitations on building or renovating properties in protected historic areas.
- Unique tax regulations, including capital gains tax and betterment tax, for foreign buyers.
- Security concerns due to the city's geopolitical situation, impacting property value and insurance.
- Potential complications with utilities and infrastructure in certain neighborhoods, affecting property functionality.
We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.
Everything you need to know is included in our Israel Property Pack
Living in Jerusalem
Living in Jerusalem is a unique experience, combining the city's rich culture and history with its modern amenities and vibrant atmosphere.
Cost of living
The cost of living in Jerusalem is relatively high, especially when it comes to housing costs. Prices for food, transportation, and other services are comparable to other major cities in Israel.
Here are some examples to better understand the cost of living in Jerusalem:
- Rent for a one-bedroom apartment in the German Colony neighborhood: $1,500/month.
- Monthly public transportation pass (Rav-Kav): $60.
- "Shawarma" dinner for two at a local eatery: $30.
- "Goldstar" beer at a bar: $5.
- Groceries at Machane Yehuda market: $150/week for a family of four.
- Basic utilities for an 85m² apartment with the Jerusalem District Electricity Company: $150/month.
- Ticket to a classical music concert at the Jerusalem Theater: $40.
- "Arak" at a local bar: $7.
Neighbourhoods and spots
Since we want to make things easy to see and understand, we created a table that tells about the different neighborhoods in Jerusalem. For yields, prices and rents, check our property pack.
| Neighborhood | Description | Strengths | Weaknesses |
|---|---|---|---|
Old City | The Old City is a historic area with narrow winding streets, home to religious sites such as the Western Wall, Church of the Holy Sepulchre, and the Dome of the Rock. | Rich cultural and religious heritage, major tourist attraction. | High population density, limited parking and accessibility. |
West Jerusalem | The western part of the city is modern and cosmopolitan, with upscale neighborhoods, shopping centers, and cultural institutions. | Well-developed infrastructure, diverse amenities, vibrant nightlife. | Higher cost of living, traffic congestion. |
East Jerusalem | East Jerusalem is predominantly Palestinian and includes areas like Sheikh Jarrah and Silwan. It is a focal point of the Israeli-Palestinian conflict. | Close to important religious and historical sites, strong sense of community. | Political tensions, limited municipal services. |
Talpiot | Talpiot is a residential neighborhood with a mix of apartment buildings and houses, known for its commercial centers and cultural venues. | Good shopping options, diverse housing choices. | Some areas can be noisy and congested. |
Rehavia | Rehavia is an upscale neighborhood known for its tree-lined streets, government offices, and the Jerusalem Theater. | Beautiful architecture, close to city center. | Expensive real estate, limited parking. |
Ein Karem | Ein Karem is a picturesque village with churches, art galleries, and a serene atmosphere, considered the birthplace of John the Baptist. | Scenic views, cultural attractions. | Less accessible by public transport. |
Malha | Malha is a bustling neighborhood with the Malha Mall, Teddy Stadium, and the Biblical Zoo, offering various entertainment and shopping opportunities. | Large shopping center, sports facilities. | Heavy traffic, lack of green spaces. |
Gilo | Gilo is a suburban neighborhood with a mix of apartments and villas, offering panoramic views of the city. | Scenic location, family-friendly. | Relatively far from the city center. |
Beit Hanina | Beit Hanina is a Palestinian neighborhood with a vibrant commercial center and a mix of modern and traditional architecture. | Commercial hub, strong community ties. | Some areas face infrastructure challenges. |
Life in Jerusalem
The economic landscape in Jerusalem is largely comprised of the service sector, which makes up a large portion of the city's economy. Additionally, tourism and high-tech industries are important contributors to the Jerusalem economy.
What expats usually like the most in Jerusalem is the city's rich cultural heritage and its diverse religious sites, such as the Western Wall, the Church of the Holy Sepulchre and the Dome of the Rock.
A good point for a property investor - Jerusalem has a mass rapid transit system known as the Jerusalem Light Rail.
Access to healthcare in Jerusalem is generally good, though there are disparities between different parts of the city.
Finally, it is worth noting that the Hebrew University of Jerusalem ranks among the top 300 universities in the world.
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Renting out in Jerusalem
This part is for you if you want to buy a property with the goal of renting it out and making money from it, rather than living there.
Long-term
Tenant Profiles in Jerusalem
According to the data reported by Wikipedia, the home ownership rate in Israel is 65%, which is average.
It means that, if you decide to buy and rent out in Jerusalem, there will be a good number of people who can become your potential tenants.
If you decide to buy and rent out to long-term tenants, you should target students, young professionals, and families looking to settle in Jerusalem. Alternatively, you can also target tourists and travelers looking for short-term rentals.
Here is a little summary table we've made for you.
| Property type and area | Profiles of potential tenants | What they are looking for | Expected monthly rent in $ |
|---|---|---|---|
Apartment in City Center | Professionals, expats | Central living, convenience | $1,000 - $2,500 |
Flat in Rehavia | Families, academics | Quiet neighborhood, green spaces | $1,200 - $2,800 |
Studio in Nachlaot | Students, artists | Bohemian atmosphere, cultural scene | $600 - $1,200 |
Condo in Talbieh | Young couples, professionals | Upscale living, historic charm | $1,000 - $2,500 |
2-Bedroom Apartment in Baka | Families, expats | Residential area, community feel | $1,200 - $2,800 |
High-rise Apartment in Pisgat Ze'ev | Urban dwellers, commuters | Modern amenities, city view | $800 - $1,500 |
1-Bedroom Apartment in Kiryat Moshe | Singles, young professionals | Accessible area, local vibe | $600 - $1,200 |
Rental yields
As of today, rental yields in Jerusalem are floating around 2 or 3%. It's low. Among other things, this low performance can be explained by Jerusalem's high home prices relative to the rental market, making it difficult for investors to generate a good return on their investment.
Properties located in desirable neighborhoods such as Talpiot, Rehavia, and Arnona tend to have the best rental yields in Jerusalem due to their high demand from young professionals and families who are attracted to their convenient location and easy access to public transportation.
For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.
Finally, be aware that rental incomes in Jerusalem are taxed at 10%, which is very advantageous.
Short-term
You could also decide to rent short-term to tourists visiting the city, as well as students and professionals attending conferences or study abroad programs in Jerusalem.
If you decide to go with that option, look for properties in the Old City, Mamilla, and the German Colony neighborhoods of Jerusalem. These areas are popular among tourists, and tend to have higher rental demand.
Currently, there are approximately 3,000 active Airbnb listings in Jerusalem, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $206, which is quite high.
You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Jerusalem can make around $2600 per month. Also, the average occupancy rate is estimated at 63%.
Is it worth buying real estate in Jerusalem then?
Buying property in Jerusalem can be a smart move if you're looking for a long-term home in a city rich with culture and history. Jerusalem offers diverse property options, from historic houses to modern apartments, and if you plan to reside there for many years, owning can provide stability and equity in a stable real estate market.
Despite a high property price-to-rent ratio, purchasing can make sense when you consider the long-term benefits. The city's expected economic growth, relatively low rental income tax rate, and the potential for property values to appreciate can make it a wise investment choice.
However, if your stay in Jerusalem is short-term or you're a non-Israeli citizen, buying property may not be the best choice due to legal complexities, title disputes, and restrictions in certain areas. The city's geopolitical situation can also pose concerns, impacting property values and insurance.
Additionally, high property prices, especially in upscale neighborhoods, may require a substantial upfront investment. Jerusalem's low rental yields further complicate matters, making it challenging to generate significant returns, particularly in certain areas.
So, while buying property in Jerusalem has its merits, it's essential to assess your circumstances, financial goals, and the local market dynamics carefully before taking the plunge, as it may not be a universally advantageous decision.
Make sure you understand the real estate market in Jerusalem
Don't rush into buying the wrong property in Israel. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.
The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.