Investing in property in Israel is “safe as houses”
Posted on 04. Feb, 2010 by buyitinisrael in Israel Real Estate
©istockphoto.com/Patricia Hofmeester
By Jacky Rosen
Coined in England sometime during the late 19th Century, the term “safe as houses” means that something is perfectly safe. Some of the variants refer to physical safety, whereas others are used in the context of ‘a sure bet’. To use another idiom, ‘there are no sure things’, but the Israeli property market is the closest thing to one…
The coming together of various factors have helped encourage the local property market to such an extent that Israel topped Knight Frank’s global house price index climbing a staggering 13.7% during the first 3 quarters of 2009. There are many factors that can be claimed to have influenced the healthy price rise in 2009, from the conservative mortgage strategies of banks that helped to avoid a crisis such as those seen in the UK & US, to low interest rates which made the costs of getting a mortgage and servicing the repayments more palatable. But in essence there are really only three factors that are of any consequence:
1. Size of Market
Lets face it, we are a small country and the future does not bode well for territorial growth, in fact the opposite seems more likely, with Israel ceding parts of her borders in the quest for peace.
2. Demand
The confines of the physical space compounded by limited supply of units and increasing demand from natural growth, immigration and those who see Israeli property as an investment for the future can only force prices up even further. Already now there are areas where demand easily outstrips supply for both sales and renting. With the national growth rate well above that of the US or Europe demand can only continue to increase.
3. Mentality
The third ‘mentality’ factor is something unique to Israel and in particular the Israeli people. Derived from the Israeli fear of being labeled a “frier” (sucker/mug) is the Israeli attitude of “why should I sell for less then what I bought it at or then what I know its worth.” This attitude was credited by some as one of the key factors that prevented any serious price falls following the collapse of the tech bubble at the start of the decade, and again now at the start of 2009 prices did not go down by any serious margin, instead there was just little or no activity.
Forget yields and price increases, looking at the global picture, as a non-Israeli today it is the ideal time to buy property in Israel: For Europeans, interest rates are still low and the long term outlook for the Pound and Euro aren’t too positive so why not maximize their current FX values by taking out a mortgage now and in the same currency that you earn in, thus avoiding the risk of currency movements when needing to convert in order to make the repayments. For US citizens, protecting against currency movements is also an important factor, and with Libor rates next to zero a mortgage in USD is not only very enticing but also a good opportunity to maximize idle funds earning little or no interest in bank accounts around the world.
© Copyright 2010
The writer is a Private Banking Manager at Bank of Jerusalem specializing in mortgages and private banking services to foreign residents and Olim. He can be reached by telephone at 02 677 4767 or by email at jackyr@bankjerusalem.com
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.
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