WHY BUY A HOME IN ISRAEL?
Whether you are looking for an investment property, a holiday home, a retirement haven or the realisation of an aliyah dream, there are many factors to consider. Here are five to begin with (and a bonus!)
From high returns on investment, profitable income yields and portfolio diversification, to a range of emotional factors that don’t fit into any financial or investment formula, there are plenty of motivating factors for Jews around the world to want to own property in Israel. Here are our top five reasons to buy your home in Israel.
1. THE VALUE OF ISRAEL REAL ESTATE HAS INCREASED STEADILY FOR MORE THAN A DECADE
Buying a home in Israel is considered a solid investment. There is constant, high demand for apartments, alongside a limited supply of available land. This imbalance maintains a steady market value. A drop in housing prices is rare, and when it does happen, it is usually minor and temporary.
Since 2008, the value of property in Israel has increased at an average rate of ten per cent per year, a high return on investment relative to the low level of risk. Between 2007 and 2015, apartment prices rose by about 100 per cent. Over the past five years, the government has made concerted efforts to curb the rise in prices by significantly increasing purchase taxes, among other measures. Nevertheless, prices have continued to rise, albeit at a slower pace.
Over the past year, against the backdrop of the economic crisis caused by Covid-19, the government has cancelled the purchase tax increase and the subsidised housing programme for first-time buyers. These measures are expected to allow the prices to continue to rise, although this will probably not happen in the immediate future, while the Israeli economy is still reeling from the effects of the pandemic. However, according to various estimates, including that of the Bank of Israel, prices are expected to rise again in the long term.
2. LANDLORDS CAN DEPEND ON STEADY YIELDS FROM THEIR INVESTMENTS THROUGH RENTAL INCOME
In general, the rental market in Israel, which relies heavily on private apartment owners, is considered to be a strong and stable market. Along with purchase prices, rent has also risen steadily over the past 13 years. While this trend has briefly paused over the past six months as homeowners have been more flexible due to the economic effects of Covid-19, landlords still have almost full occupancy of their rental apartments, and it is rare to come across an empty unit without demand.
The cost of homes in Israel is relatively high, especially in the two main areas of demand — Tel Aviv and its surrounding cities (known as “Gush Dan”) in central Israel; and Jerusalem. In these areas, the yields on rental property are not particularly high, however, in the peripheral areas, where more affordable housing can be found, it is possible to reach yield levels of five per cent or more.
A recent study in Israeli business newspaper Globes found that in Dimona, in the heart of the Negev desert, the average yield on an investment apartment is six per cent. In other cities in the periphery, such as Bet Shean, in the Jordan Valley, and Nesher, just south of Haifa, the yield can also reach above five per cent in certain neighbourhoods. However, even these areas have seen a moderate rise in apartment prices in recent years.
Those looking to purchase a home in Israel as an investment must decide on which parameters to base their decision. If the goal is capital gains from the increase in property value, then the areas of high demand in central Israel are probably a better route. If buyers are looking for a stable return from rental income, then investing in peripheral areas makes more sense.
3. BUYING PROPERTY IN ISRAEL IS AN EXCELLENT WAY TO DIVERSIFY YOUR INVESTMENT PORTFOLIO AND REDUCE RISK
Intelligent investors are careful not to put all their eggs into one basket. Focusing on one commodity, whether it is stocks, gold, or real estate, exposes investors to too much risk in the event of a crisis in that particular industry. This approach is even more important today, as the global economy faces a severe economic crisis.
Beyond real estate being a solid investment in and of itself, a home in Israel benefits from the unique characteristics of the Israeli market. With a population increase of two per cent per year, one of the highest in the Western world, the Israeli real estate market maintains an extremely high level of demand. Because of the small size of the country and the limited amount of land zoned for residential construction, apartments in Israel are a commodity with constantly increasing value. Investing in residential real estate in Israel is a simple way to reduce risk in your investment portfolio.
4. OWNING PROPERTY IN ISRAEL IS AN IMPORTANT SAFETY NET AGAINST ANTISEMITISM, POLITICAL UNREST AND FINANCIAL STRESS
Many diaspora Jews have decided to buy a home in Israel as an investment in the safety of their family, as well as for their own peace of mind.
5. ISRAEL IS THE IDEAL LOCATION FOR A SUMMER, HOLIDAY OR RETIREMENT HOME
A home in Israel can be an enjoyable and worthwhile investment, even if it does not serve as a primary place of residence. An apartment near the beach is perfect for family holidays, while nothing compares to having your own place in the Holyland for the High Holy Days, Passover or Shavuot. For those who have always dreamed of making aliyah, Covid has taught us that we are not as dependent on the physical workplace as we’d thought and many can continue their jobs remotely, even from Israel. For those whose business or family obligations keep them elsewhere, buying a home in Israel is one step toward realising the dream, even if the benefits are reaped only after retirement or enjoyed by future generations.
Finally, of all the good reasons to buy a home in Israel, the following idea, shared by the late Rabbi Lord Jonathan Sacks z”l, seems to fit all. While Rabbi Sacks and his wife were on holiday in the southern resort city of Eilat, they once took a trip in a glass-bottomed boat to see the tropical fish and beautiful corals in the protected reefs. The captain overheard Rabbi Sacks and his wife talking and asked them: “Are you from England?” He had just returned from a holiday there and told them: “The grass is so green, the buildings are so old and the people, so polite” but with a big smile, he spread his arms and looked around at the barren desert hills, and said, “aval zeh shelanu — but this is ours!”
Published on Buyitinisrael.com on 08/11/20, https://www.buyitinisrael. com/news/why-buy-a-home-in-israel/. Buyitinisrael is an English-language website for buying a home in Israel, providing real estate news, market updates and professional guidance to navigate Israel’s property scene with confidence: www.buyitinisrael.com Debbie Goldfischer is the founder and chief editor of Buyitinisrael and investment advisor to foreign clients at a leading appraisal firm in Tel Aviv.
The contents of this article are designed to provide the reader with general information and not to serve as legal or other professional advice for a particular transaction. Readers are advised to obtain advice from qualified professionals prior to entering into any transaction
The Israeli real estate market maintains extremely high demand’ Buying a home in Israel is one step towards realising the dream’