Prices for Properties in Jerusalem Going to Fall?
With recent turmoil in the political and economic arenas, a shrewd observer might think of the Israeli real-estate market, especially in Jerusalem, as a bubble that might soon burst. However, prices for real estate in Jerusalem are not going to drop anytime soon, and we are expecting great market stability in the near future – Let’s look at some of the key indicators.
The Current Climate
First, undoubtedly, Israel is in a time of economic growth, with unemployment rates at a relative low point. Jerusalem has been in what some might have called a ‘housing bubble’ with very high housing costs. However, this has driven some Jerusalemites to seek properties outside of the city. Since this bubble was the result of a high demand for real estate and little new building projects, old residents leaving acts as a pressure valve, lessening demand and making for a stable market.
Jerusalem’s Global Placement
Since 2008, real estate in Jerusalem has grown in price. International and non-local market buyers have contributed to this rise in prices, by buying local assets – Jerusalem being a sacred place for many peoples, and it is common for outsiders to buy real-estate near places sacred to their religion. This has made it difficult for local residents trying to buy real estate in Jerusalem – as the demand rose, so did the prices and the demand for Jerusalem rentals.
The good news is that Jerusalem real estate prices have stabilized. The market will most likely remain a sellers’ market, and prices will stay high, but they are not expected to rise higher. However, unless new housing projects are started,the Jerusalem real estate prices are likely to stay stable and homeowners can rest easy knowing that property values will probably hold, even if the economy plummets, due to international interest. Much like other areas around the globe with historically significant monuments, the surrounding house values reflect the historic and religious value of the area.
Further evidence of the coming stabilization is the mortgage market – tight regulation means that unlike in other countries, the mortgage market will not over-extend, making sure the US market crash will not repeat itself in Israel. There is some cause for concern in that the average per capita income in Jerusalem does not meet the housing costs, but at least the prices seem to have stabilized. Keep in mind that in the long-term, the government is looking to make it easier for developers to build new properties. However, it could take almost fifteen years for these changes to be implemented, so expect Jerusalem properties to retain their high prices.