December Market Update
These are the opinions of Ben Levene, CapitIL’s Director of Sales
Tourism and Purchase Tax Rate Spikes
December is kicking off as a busy month for the Jerusalem real estate market.
With the tourism spike over Thanksgiving and Channukah at the end of November, even more buyers have entered the market, contributing to the already very high demand and low supply of apartments in Jerusalem.
Subsequently, the purchase tax rate rose, landing at 8%+ depending on the purchase price. Will this have any effect on the market?
I don’t believe that the raise in purchase tax will lower the high demand Jerusalem’s real estate has been seeing. While it is a shame, and another expense to bear in mind during this process, I don’t think that the fluctuations in the purchase tax rate are significant enough that people will pause their apartment search or wait to jump into the market.
High Demand, Low Supply
Most of our clients are looking for the same parameters in the same neighborhoods, contributing to this dilemma of high demand and low supply. Unfortunately, we need to be realistic about the market as it stands, and the clients that have entered negotiations are those that have been realistic about their budget and willing to compromise on certain aspects. We have seen very few bargains, and have learned that if there is one, then it’s for good reason.
In my opinion, now is the time to enter the market, right before the New Year starts, as the prices and value of Jerusalem real estate seems to continue to climb! Jerusalem is facing the dilemma of very high demand with low supply of apartments, and because of the low supply, I do not see prices dropping any time soon.
About 80% of potential buyers would need to be affected in order to "free up" more supply of apartments. Based on conversations with clients over the last few weeks, there is an atittude of "onwards and upwards" when it comes to purchasing a home in Jerusalem, despite the rise in purchase tax and high demand/ low supply. Therefore, I do not currently see any factor that will decrease the purchase prices that we are seeing these days.