Beginning of 2023 Market Update
(This blog is based on the thoughts of CapitIL Real Estate Agency Sales Director Ben Levene through his market experience. This is not financial advice and anyone making purchases and investments must do thorough due diligence and make their own personal decisions.)
The Jerusalem real estate market in 2022 was noteworthy for its high demand and limited supply.
As a broker, I found the conditions challenging but rewarding. I am pleased to have helped many families purchase their dream homes in Jerusalem, which is my ultimate goal as a broker.
As we begin 2023, it is worth noting some key statistics from the previous year.
Interest rates in Israel rose by 3.5% in the last 12 months, and the exchange rate of the US dollar to the Israeli shekel saw an increase of 10-15%, moving from around 3.1 at the start of 2022 to above 3.5 at the start of 2023.
What does this mean for you as buyers looking at the market going into 2023?
As interest rates have risen, obtaining loans from banks has become more costly.
Although the prices may stabilize for the next 6-12 months, I do not expect to see a significant drop in prices in the future. Once stabilization in interest rates occurs, I predict prices will rise again.
As prices stabilize in the Jerusalem real estate market, it is a prime time to purchase property before prices rise again. This stable period is a rarity in the market, making it a unique opportunity.
Despite the rise in interest rates over the past year, prices have not dropped significantly because of the conservative lending practices of banks in Israel.
Many homeowners are choosing to stay put, as the costs of moving, including taxes and relocation expenses, plus the difficulty of finding suitable housing, may not be worth trying in the short term.
This is one reason why selling property is not a popular choice at the moment. Secondly, many people believe that rates are a short-medium-term move and expect them to lower significantly in the next two to three years.
The Dollar VS the Shekel
The strengthening of the US dollar against the Israeli shekel is a major advantage for my clients who are buying property from abroad.
This increase in the exchange rate means that buyers from the US now have 10-15% more purchasing power in shekels than they did a year ago.
This has led to an influx of new buyers who have been waiting to purchase an apartment in Jerusalem.
Even if you have to spend an extra 40,000 NIS per year on mortgage repayments (as a random example), the number of shekels you can get for your dollars still makes it a potentially very good purchase.
This makes the Jerusalem real estate market an extremely attractive option for American buyers.
Demand From America
As we head towards another election cycle in the US, the current economic, political, and social uncertainty in the US seems to be driving a significant increase in demand for real estate in Israel, regardless of political affiliation.
As we begin 2023, the market conditions present opportunities for buyers.
The only reason to wait to make a purchase would be if you believe that real estate prices in prime Jerusalem neighborhoods will drop by 10-20%, which is unlikely given the current high demand and limited supply.
For anyone looking to make a purchase this year, feel free to reach out to discuss your Jerusalem property needs at email@example.com.