2024-02-02 06:45:08
While 2023 was marked as a lost year, the brokers are convinced that it is precisely now that we will see the Jerusalem market come back to life. The reasons are, among other things, the expected completion of infrastructure and urban renewal projects, increasing demand from Jews abroad and interest rates that will probably stop rising. And what about prices – they are expected to rise.
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The city of Jerusalem
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“The last months of 2023 were a jarring chord for this year in terms of real estate,” praises the vice-chairman of the Board of Realtors and head of the research committee at the office, Amir Azraf. “I foresee an increase in prices during the coming year, which will increase as we reach the end,” asserts Azraf, “and this is due to several factors. The first is construction starts – in recent months there has been a significant decrease in the amount of construction starts, mainly due to the stoppage of the work of the Palestinian workers. Importing foreign workers It is being conducted lazily, and apparently in the coming months we will not see a significant return of workers from the Palestinian Authority to the construction sites. This means a low future supply of apartments that will not meet the demands and will lead to an increase in prices.’
“Another factor is the exhaustion of the interest rate increase. It is true that in 2023 the high interest rate proved to significantly moderate demand, but the change in the trend that started recently (and it seems that this will continue, albeit in moderation) will return investors to the market when the returns from rent will be higher in relation to the cost of their bank leverage, as well as housing applicants whose mortgage repayments will decrease and they will be able to meet them in the future.’
“Another factor is the current wave of anti-Semitism, which is leading to a significant awakening among Jews abroad regarding the purchase of apartments in Israel, with an emphasis on Jerusalem. To the extent that this wave translates into actual purchases, this phenomenon will lead to an increase in price levels in the city, with an emphasis on the neighborhoods of Rehavia, Talvia, Katmon, Bekaa and Arnona “.
“And finally, urban renewal as well – Jerusalem is experiencing a real revolution in this field these days. Apartment buyers in those evacuation-construction projects will greatly appreciate their investment in the future, once because of the spacious property value on the day of delivery, and once again because of the completion of the light rail route, the proximity of which causes an additional increase in value.’ “Finally,” says Azraf, “the year 2024 is marked as the year when prices will rise again, and in any case, the better we get out of the war, this will cause the return of demand and an increased increase in prices.”
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Construction in Jerusalem
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What is your prediction for 2024? “After the war, there are two options – prosperity or, on the other hand, recession. Israel’s economy entered the war in good shape, and we even saw a reduction in interest rates during the war. Although this does not predict the future, we can see on the horizon a moderate decrease in the Bank of Israel interest rate, which, as we know, has an effect evident on the real estate situation. Of course, you have to remember that currently there are not that many new constructions and there is a shortage of personnel. It seems that this is the time to buy apartments and invest. Today’s high interest rates will not last long and there will always be the possibility of refinancing.”
The chairman of the National Chamber of Real Estate Brokers, Itzik Levy, expands and explains that “the expectation for the coming years in regards to construction starts and the issuance of building permits is a large shortage of apartments compared to the large demand in Israel, which is about 55,000 units per year. In fact, in 2023 there was a decrease of about 20 percent in construction starts, so that there is a severe shortage of residential units.
“What needs to be understood is that this is a market that has shrunk significantly. There are very few construction starts and there is going to be a big shortage of apartments. What’s more, the government currently has no plan to deal with the problem. There is also a serious problem with the foreign workers and the costs and construction inputs will become very expensive. All of this will contribute to an increase in prices Hurts within a year from today and at a rate of at least ten percent.’
“One of the most important players in residential apartments is the MMD. Here we detect a price drop in buildings built before 1990. This drop is so sharp that the same unit on the same street is currently sold for up to 20 percent less if it does not include MMD. This drop is expected to continue in the new year as well.”
Levy also mentions the south: “In areas such as Ofakim, Sderot and Ofakim, and also in the north of the country, there are very few transactions at the moment. But there are reports of the beginning of activity in the area of Ofakim and Nativot, with the understanding (of investors) that it is now worth purchasing housing units in these areas Ashkelon is also receiving interest from investors, due to the expectation that as soon as a solution to the security problems is found, prices will rise.”
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