Analysis of the Jerusalem Property Market:
End of October 2021
The Jerusalem property market is currently very strong; there are very few options for sale with a large amount of buyers in the pool. This means that when a good property enters the market that ticks all of the boxes (primarily a Sukkah balcony, parking, and Shabbat elevator), it goes very quickly. It is important for buyers to: A) be prepared and in the right position to buy as soon as they find an apartment that meets their needs, or B) be willing to compromise on some of the criteria they are looking for, in order to have more options of lovely apartments at reasonable price points.
With the market booming and properties selling so quickly, what will happen when the skies open up to tourists starting November 1? While we can’t predict the future, all signs point to the market continuing to run strong, as well as possible changes to the purchase tax amounts and price increases. People are already trying to get a head start by getting in the market now, ahead of price increases.
Price Adjustments in the Period of COVID-19
About 18 months ago at the start of COVID, the Israeli government adjusted the purchase tax rates in an effort to keep buyers coming into the market; this saved buyers on average 3-4% on the total of a purchase. Despite this, there weren’t any significant changes to the market over the period of COVID; however, it is unknown whether or not the market would have slowed down had the numbers not been adjusted. CapitIL Real Estate’s Director of Sales, Ben Levene, believes that the market needed the support at that time.
If the government were to now increase the purchase tax again by 2-5% on all foreign purchases, what would this do to the market? At the moment there is no confirmation that this will occur, just speculation. If this does happen, it seemingly won’t be enough to stop people from entering the market, but now is the opportune time for anyone interested in purchasing property in Israel to jump into the market, before a potential increase could be put into effect.
Predictions for the Upcoming Winter Season
What November and this winter season will bring to this market will be extremely different than what we have seen in years past. Normally, November begins the period of wrapping up the year, closing deals in hopes of moving into new homes by Pesach time. This year, with the skies finally opening up to tourism after 2 years of tight restrictions due to COVID, we are expecting heavy Chanukah traffic, which will bring a load more of potential buyers to the market.
What is interesting is that although most properties are selling quickly, even seeing units that have been stuck on the market for a while now starting to move, there are multiple TAMA 38 projects popping up in the prime Jerusalem neighborhoods like Baka and Katamon. These projects offer even more fantastic opportunities to enter the market at great price points.
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