With price highs and transaction lows, securing a property deal seems harder than ever
It is easy to rattle off numbers that can turn most homeowners into on-paper millionaires, and convince those who do not yet own a property that they will need to win the lottery to do so.
According to recent figures by the Central Bureau of Statistics, sales prices “only” rose by 9.8% over the past 12 months from April 2022, still approximately twice the rate of general inflation and many multiples of the increases in the average salary. But while price growth may be tapering off, this slowdown comes after months of double-digit inflation with annual increases topping 20% just a few months ago.
In the first quarter of 2023, the “average price” for a property in Tel Aviv was NIS 2.9 million ($786,000); NIS 2.4 million in Jerusalem ($650,000); and NIS 2.6 million ($704,000) for a home in the center of the country.
The combination of sky-high prices, and increasing costs of home loans due to rising interest rates (up in May for the 10th time in a row to stand at 4.75%) has also been reducing the number of transactions in the housing market. For months, both realtors and mortgage advisors have been reporting that the market was quiet.
Then the quarterly report published by the Finance Ministry for April showed a 55% drop in property transactions compared to the same period in 2022.
These figures reflect a housing market that is difficult to navigate, and behind them are the real-life stories of people struggling because of this particular environment.
Such is the fear of being blacklisted — by real estate agents or by potential sellers — that while those interviewed were happy to share their stories with The Times of Israel, they all separately asked that their identities remain private.
Jamie and her husband fulfilled their lifelong dream of retiring to Israel in October 2021. When they made aliyah they stayed with friends for a few weeks until they found an apartment to rent in Jerusalem. Renting gave them time to explore neighborhoods to find the best-suited neighborhood for them. They reunited with old friends and made new ones.
In April 2022, they started to search for their “forever home,” looking primarily in the Katamon and Baka neighborhoods. Since then, Jamie estimates that they have seen around 25 different apartments.
Their criteria do not seem unreasonable: An apartment that gets good light, measures somewhere between 100 and 115 meters square (1,000 to 1,200 square feet), has three bedrooms, an elevator that could comfortably fit a stroller or a wheelchair, and with a kitchen big enough to accommodate kashrut requirements and two people cooking alongside each other. But they are struggling to find anything suitable.
“Prices here in Jerusalem are outrageous, shockingly high for what you get. For $1 million to $1.5 million (NIS 3.7 to 5.5 million), you can only get an 85 to 100 square meter (915 to 1,000 square feet) apartment,” said Jamie.
Over the time they have been looking, Jamie and her husband have put in an offer on one apartment, stretching their budget to the max. But they were turned down as the owner preferred to hold out for a higher price and has now upped the asking price by a further 20%. It is one of many apartments they have viewed or seen advertised over the last year and a half that are still on the market.
Jamie believes that “most apartments that are not selling seem to be over-priced, or they have a strange layout, or there is something wrong with the apartment, structurally or legally, or they need major work which in the end significantly pushes up the cost of buying the apartment.”
The area in which they are looking is also popular with those buying holiday homes, increasing the competition for a limited number of properties and pushing up prices.
“We will hold out as long as we can,” said Jamie. But reluctantly, she and her husband are considering looking on the outskirts of Jerusalem, or even outside the city where they will be too far away for friends and family to walk over to get together on Shabbat and holidays.
Another alternative they are thinking about is resigning themselves to never buying a home in Israel, and committing to renting long-term.
Meanwhile, they have yet to unpack their possessions as they are certain they will need to move again.
In the central Israel town of Kfar Saba, a couple who separated more than a year ago is struggling to find a buyer for their family home. Selling it is critical to the ex-spouses. With well-paying jobs in the high-tech sector, each can afford to take out a mortgage to buy separate apartments with space for them and their children, but they need the capital from the sale to make the necessary down payments.
Initially, it seemed that all that was required was to let the relevant local Facebook groups know that the place was for sale. The neighborhood is in high demand from families, with good schools, transport links, shops and leisure facilities. The house has six rooms, a beautiful garden and is in good shape. The owners knew that the limited number of other houses that had been offered for sale nearby over the last few years had sold fast, at prices that far exceeded what they had originally paid when the area was still developing.
But more than six months on, they have taken on a number of realtors to market the property more widely, and are still waiting for a serious buyer.
Joint owner Lia says, “People come and look at it and find fault, even though there is nothing wrong with it. They say they will need to decorate when they move in, but of course, that is something a buyer would want to do.
“What really seems to be happening is that the people who come to view the house are nervous about where the market is going, and whether they can afford the payments on a mortgage, and so they don’t want to commit. We know the price is right for this area and for this time. Of course we would take a serious offer, but we can’t afford to sell for less than the house is worth.
“I’m taking calls several times a week from the owner of the apartment I want to buy. He wants to sell it to me and we’ve agreed on a price. But I can’t move forward until the house is sold, and I really don’t know what else I can do to make that happen. Maybe the right person will come along eventually, but until then we are all stuck,” she said.
In Ramat Beit Shemesh, a father is hoping to sell the family’s four-room apartment to arrange down payments for his children. Shimon is part of the ultra-Orthodox community in the city and has three sons in their twenties. The first got married last year, and in line with the expectations from the bride’s family, Shimon provided a sum of money that could allow the young couple to put a down payment on a property within walking distance of the bride’s parents.
He knows that he needs to be able to do the same for the other two boys. If not, the matchmaker who introduces them to suitable young women will not take them on. But these are large sums of money, and the only substantial asset Shimon has is his house, which he is looking to sell. It will mean that he will have to leave Ramat Beit Shemesh after 25 years. His sights are set on Afula, where property is cheaper.
“Our roots are here, our community is here and our friends are here,” said Shimon. “Here, or somewhere near here, is where our sons will live and please G-d start families. But I need to be able to provide in cash for my sons if I want them to find good shidduchim (arranged marriage partners), and I don’t have that kind of money sitting in the bank.”
“I have done the sums. We should be able to sell our home here [in Ramat Beit Shemesh] for NIS 2.3 million, and to buy somewhere similar in Afula for NIS 1.2 million, or possibly even less. When you look at those numbers, how can I not move? That would mean that I can give each of the boys half a million shekels to start their married life.”
The difficulty is that, once again, buyers have been coming through the apartment but it has not yet sold.
“We had someone, at the start of the year, who very much wanted to buy our apartment, but his salary was not enough to get the mortgage he needed. Someone else also made an offer and then pulled out. We have thought about renting it out and then renting in Afula – but that doesn’t really help because the difference in the rentals is not enough. And the boys need a down payment, not money each month.”
In the meantime, the unmarried sons have not started the process of meeting up with potential life partners.
A steady flow of people is still arriving to see the apartment, and Shimon and his wife have spent a Shabbat in Afula to get better acquainted with the community there.
“We are not the only ones in this position, and it is clear that others who identify as ultra-Orthodox are taking the same decision and moving from Bnei Brak, Jerusalem, Beit Shemesh, to Afula. Of course, my wife and I will have to start over again, but it is worth it for our children’s future,” said Shimon.
