Jerusalem Market Update:
(These are the thoughts of Ben Levene, CEO and Director of Sales at CapitIL Real Estate)
With real estate market prices high and interest rates rising in both Israel and America, Summer 2022 is an interesting time in the Jerusalem market.
Buyers would hope and think that the Jerusalem market prices would drop!
However, it is still the case that when new properties which tick most boxes come onto the market, they sell extremely quickly, leaving very little stock on the market.
It is this limited stock that creates a firm price floor. Although the current economic and market conditions would seemingly dictate a market drop, the Jerusalem market in my opinion is still strong.
This observation is not based on any statistical findings, but rather on what I see from my own clients and from talking to other brokers who are seeing similar findings. Limited supply and large demand prices seem to be stable though not rising so quickly.
Our Biggest Issue Is Supply
With the world being in somewhat of an economic turmoil, one of the things I have seen is there is less to sell. Owners of expensive homes in Jerusalem will probably not sell unless there is a pressing need.
Anyone who is willing to see needs to price smartly. Pricing smartly requires a seller not to price at a premium but “feel and find the market clearing price”.
Pricing at a premium of 10% (a number sellers have been able to command for the past 12 months) will not likely sell but a more moderate price will probably clear.
Pricing smartly does not require drastic price reductions either. There is not a lot of stock around. When looking at new developments there is also little stock and it gets sold out very quickly.
Areas such as German Colony, Baka, and Katamon, are in demand and there are not a large number of new builds to keep up. If the new developments check certain boxes such as parking, sukkah balcony, and an elevator, they are likely to sell fast.
Demand is extremely high due to uncertainty; uncertainty economically and politically is often a major driver pushing people to have a base in Israel and based on what my clients are saying to me they currently feel a long period of uncertainty.
This should keep on driving demand.
Could the Market Slow Down?
There has been no huge drop in demand so far. In my view, demand would need to drop by such a huge amount to impact sales seriously.
To use a hypothetical example - let’s say 20% of the buyers are taking it more cautiously at the moment, in the price range of 4-7 million shekel. There are still 80% of the buyers left that will keep the market trending the way it is currently.
Therefore, despite the fact that the world’s economic status is tough at the moment, the Jerusalem real estate market has not taken any significant hits.
It is my personal view that the market will drop only with a huge increase in supply (not expected) or with the current economic uncertainty carrying on for a number of years.
Limited supply means limited opportunity.
The market may stagnate but I do not see the prices significantly decreasing. Tight supply means demand is still significantly outstripping supply for tick-all boxes apartments.
With prices potentially leveling out, this is in my opinion a great time to buy if you find that apartment right for you.
This blog is based on my own experience of my day-to-day viewing of the market. All opinions are personal. There is no economic or financial advice. For this please speak to your financial advisors.