Israel home prices are still on the rise: 4% annual increase, 5% in Jerusalem

Israel home prices are, once again, steadily climbing, right at the height of the economic crisis brought on by the Covid pandemic. According to data recently published by the Central Bureau of Statistics, 2020 saw an annual increase of 4% in home prices in Israel. The majority of the increase – over 2% – occurred in the last quarter of 2020, with a rise of 0.9% per month from November-December 2020. These statistics indicate that the Israel real estate upward trend may continue through 2021. 

It is slightly confusing that home prices in Israel continue to rise, despite the fact that unemployment figures are at an all time high. One explanation is that young people and low-income families have been hit hardest by the economic crisis, meaning that the purchasing power of those who could have realistically afforded to buy an apartment in the first place was less affected. It is also possible that the slowdown in the construction industry, reflected in a decline in new construction starts, is having a ripple effect on the market. The expected decline in supply has led to a rise in Israel home prices.

Prices have increased by the highest margins in the North and Jerusalem

An analysis of the rise in Israel’s home prices by geographic region reveals that the northern district has seen the sharpest increase over the last year – a jump of 5.2%. This area, which includes Nahariya, Acre, Carmiel, Tiberias, and Afula, typically has cheaper real estate. The region in Israel with the second-largest increase is the Jerusalem area, including Jerusalem and Bet Shemesh, with an increase of 5% in home prices.

Real estate prices in the country’s most expensive area – the Tel Aviv district, which includes the Gush Dan cities of Tel Aviv, Ramat Gan, Holon, Bnei Brak, and Herzliya, rose by 4.6% in 2020, and prices in both the Central districts (Modi’in, Netanya, Ra’anana, and Rehovot) and the Southern districts (Be’er Sheva, Ashdod, and Ashkelon) have risen by 3.5% in the past year. Only in the Haifa district, which includes Haifa and the Krayot, have real estate prices remained stable throughout the year.

The CBS also published data on average real estate prices – both nationally and in major cities

The average price for purchasing an apartment in the last quarter of 2020 was NIS 1.57 million, compared to an average price of NIS 1.54 million in the last quarter of 2019. The average price for a three-room apartment was NIS 1.2 million, with NIS 1.54 million for a four-room apartment and NIS 1.94 million for a five-room apartment.  

In Jerusalem in the last quarter of 2020, about 270 real estate deals were sealed for the purchase of three-room apartments, at an average price of NIS 1.73 million. A similar amount of transactions were signed for the purchase of 4-room apartments, at an average price of NIS 2.4 million, and 5-room apartments went for around NIS 2.85 million.

In Tel Aviv, 2-room apartments were sold for an average price of NIS 2.13 million, with NIS 2.62 million for 3-room apartments, NIS 3.52 million for 4-room apartments, and NIS 4.7 million for 5-room apartments. 

In Haifa, which has become popular among investors in recent years, the average price of a 2-room apartment was NIS 656,000. Deals for the purchase of 3-room apartments were the most common during the last quarter of 2020, with close to 400 transactions at an average price of NIS 931,000. The average price of a 4-room apartment was NIS 1.35 million, and most 5-room apartments went for around NIS 1.86 million.

In Bet Shemesh, 3-room apartments were sold in the last quarter of 2020 at an average price of NIS 1.12 million, 4-room apartments for NIS 1.45 million, and 5-room apartments for NIS 1.77 million. In Be’er Sheva, a southern city which has also become popular for investment buyers, the average price of a 3-room apartment was NIS 777,000, with NIS 1.12 million for 4-room apartments, and NIS 1.48 million for 5-room apartments. 

israel home prices
Apartment buildings in Netanya

In the coastal city of Netanya, popular among foreign residents, the average price of a 3-room apartment was NIS 1.25 million, 4-room apartments were sold at an average price of 1.81 million, and 5-room apartments went for around NIS 2.04 million. In Ashdod, another city on the Mediterranean Sea, the average price of 3-room apartments was NIS 1.26 million, the price of a 4-room apartment was NIS 1.65 million, and the price of 5-room apartments was NIS 2.27 million.

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.