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 worldwide to want to own property in Israel. Here are our top 5 reasons to buy your home in Israel:
1. Real estate in Israel is a commodity with constantly increasing value
Buying a home in Israel is considered a solid investment. There is constant, high demand for apartments, alongside a limited supply of available land zoned for residential construction, this imbalance maintains a steady market value. A drop in housing prices is rare; when it does happen, it is usually minor and short-lived.
With the exception of last year, since 2008, the value of property in Israel has increased at an average rate of 10% per year, a high return on investment relative to the low level of risk. Between 2007 and 2015, apartment prices rose by about 100%. Over the past decade, the government made concerted efforts to curb prices by significantly increasing purchase taxes, among other measures. Nevertheless, prices have continued to rise, albeit at a slower pace.
This trend briefly paused in 2023. With frequent interest rate increases, the housing market experienced a severe slowdown and a decline of tens of percentage points in the number of transactions. This took place before the devastating events of October 7th and the subsequent war that broke out, dealing a severe blow to the country. During the first few months of the aftermath, as citizens were dealing with the trauma of the events and the ensuing war with Hamas, many serving in the IDF reserves, plans were put on hold, and sales levels decreased further. Figures published were the lowest since home purchase transactions began to be indexed in the early 2000s, and only once, in April 2020, when the first lockdown was imposed in Israel due to the COVID-19 pandemic, was a slightly lower transaction figure recorded.
Nine months later, despite the ongoing war and uncertainty regarding the security situation, local and foreign buyers are back, sales activities have returned to prewar levels, and prices have increased by close to 3%, even more in high-demand areas. With a population growth rate that is among the highest in the Western world, rising immigration, relocation of hundreds of thousands of citizens from the North and the South to the country’s center, and a stagnated construction industry due to the loss of 80% of manpower, the Israeli real estate market maintains a very high level of demand and experts predict that prices will continue to rise 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 strong and stable. Apart from purchase prices, rent has risen steadily over the past 20 years. This trend leads to full occupancy of rental apartments, and it is rare to come across an empty unit priced at the correct market rate without tenants. As home prices continue to rise, many young couples will be forced to abandon their homeownership dream and rent for the long term, as is common in many countries worldwide.
The cost of homes in Israel is high, especially in the two main areas of demand – Tel Aviv and its surrounding cities (known as “Gush Dan”) in central Israel and Jerusalem. Consequently, 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 5% or higher yield levels.
A study in the Israeli business newspaper Globes found that in Dimona, in the heart of the Negev Desert, the average yield on an investment apartment is six percent. In other cities in the periphery, such as Bet Shean, Jordan Valley, and Nesher, just south of Haifa, the yield can also reach above five percent in certain neighborhoods. However, these areas, too, 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 increased property value, then the areas of high demand in central Israel are probably a better route. Purchasing in peripheral areas makes more sense if investors seek a reasonable return from rental income.
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 stocks, gold, or real estate, exposes investors to too much risk in a crisis in that particular industry. Similarly, diversification of real estate holdings into different markets is advisable, particularly in the face of the economic and geopolitical global uncertainty that we are seeing today.
Investing in real estate in Israel is a simple way to reduce risk in your investment portfolio. Beyond real estate, a home in Israel is a solid investment that benefits from the market’s unique characteristics and maintains a very high level of demand.
4. Owning property in Israel is an important safety net in the shadow of rising global anti-Semitism, radical extremism and political unrest
Even before October 7th, anti-Semitism was growing steadily throughout Europe and North America, appearing in ways not seen in the Western world since before World War II. Terrorist attacks in synagogues, kosher delicacies, and Jewish schools became more and more common, and anti-Semitic sentiments that people previously kept to themselves are now expressed publicly at demonstrations and in the press.
These phenomena have only gotten worse during the Gaza War, and Jews all over the world are facing unprecedented levels of hatred and hostility. To add to this, political unrest, financial stress, and radical extremism throughout the Western world, many Diaspora Jews have decided to make Aliyah. For those unable to make the move at this stage, many buy a home in Israel knowing that they have a place waiting for their families if G-d forbid they need to leave. Buying real estate in Israel could mean investing in your family’s safety and peace of mind.
5. Israel is the ideal location for a summer, holiday, or retirement home
Owning a home in Israel can be an enjoyable and worthwhile investment, even if it will not serve as a primary place of residence. An apartment near the beach is perfect for family vacations, while nothing compares to having your place in the Holy Land for the High Holidays, Passover, or Shavuot.
For those who have always dreamed of making Aliyah, COVID-19 taught us that we are not as dependent on the physical workplace as we previously thought, and many can continue their jobs working remotely, even from Israel. For those whose business or family obligations keep them elsewhere, buying a home in Israel is one way to realize the dream, even if the benefits are only reaped after retirement or enjoyed by future generations.
Finally, of all the good reasons to buy a home in Israel, the idea shared by the late Rabbi Lord Jonathan Sacks z”l seems to fit all. While Rabbi Sacks and his wife were once on vacation in the southern resort city of Eilat, they 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!”
Everybody wants a Buyitinisrael, now more than ever before. Whether you’re thinking about Aliyah, looking for a home or a haven, or wanting to support the Israeli economy, drop us a line when you’re ready to talk. Whatever the reason, Buyitinisrael.
Debbie, founder and CEO of Buyitinisrael, has been a leading figure in real estate since 2004, dedicated to helping foreign buyers purchase homes in Israel. Observing a lack of reliable English-language resources on Israeli property, she founded Buyitinisrael in 2020, drawing on her extensive real estate and marketing experience, deep knowledge of the local market, and strong industry connections.
Debbie can be reached at [email protected].
