Jerusalem Real Estate prices up until the start of 2023
Whilst Jerusalem property prices have risen due to specific factors within the City of Gold, we cannot ignore some issues that have emerged worldwide.
Ultimately, it would be folly to write that only Jerusalem Real Estate Prices have risen in recent years.
The key difference now appears to be that the world in general saw real estate prices rise between 2019 and 2021. In 2022, Israel continued to see major surges in real estate prices.
But, as we head into 2023, is the market about to follow the global one or will it remain an outlier?
We are updating this guide at the start of 2023, after a tumultuous couple of years for many, during a global pandemic.
Three key factors that saw real estate prices surge worldwide
The price of real estate surged virtually worldwide between 2019 and 2022 due to a combination of three factors:
1. Robust household balance sheets.
2. A greater desire to spend more on living arrangements.
3. The severity of supply constraints.
The first of these two issues are for sure at play in Jerusalem.
There are plenty of wealthy or well-off individuals with a desire to live or have a home in Jerusalem.
Perhaps with money from abroad, or from Israel. Which has a burgeoning hi-tech scene and no shortage of smart entrepreneurs.
The desire to spend more on living arrangements can be attributed to the pandemic.
After all, many of us had the opportunity to really think about how we would live and what sort of life we could lead, during the early months of the pandemic, where lockdowns across the globe allowed for more time to simply reassess life.
Demand vs supply is a real issue for Jerusalem Real Estate
Ultimately though, it is the third factor, the demand vs supply that is really important to consider when looking at Jerusalem Real Estate and the rise in property prices.
We have referenced this many times in recent years on CapitIL.com.
With many of the Jerusalem neighborhoods we cover, very popular amongst the Anglo/Olim community, there is simply more demand than supply.
Of course, things change, new projects emerge and government intervention is always trying to alter the dynamic.
However, even policies with great intentions might not shift the dynamic.
Rising anti-semitism across the globe in recent years is another factor to explain why so many Jews outside Israel, wish to live or own property in Jerusalem.
Real Estate prices in Israel have surged, in all areas
And, from the situation across the world, we must also recognize how things are playing out in Israel, the country.
The two decades prior to the pandemic saw a huge increase in property prices across the country. A Bank of Israel Study reported that housing prices went up by 35% between 2008 and late 2010.
A steady increase in real estate prices continued in the 2010s, only for another dramatic rise in 2021. Some areas in Israel saw a rise of 12.5% in 2021 alone. (Source here.)
There was a marked shift in Israel property prices after the first lockdown in March/April 2020 in the next year and a half.
Much of this was down to political instability, as the country went to five successive elections between April 2019 and November 2022.
Mortgage taking in Israel was at record levels in 2021
According to Globes, “The district that pulled the market upwards in the period following the first lockdown was Jerusalem, which recorded a 5% price rise in the seven months from May to November.”
Much of the reasoning behind the increase in property prices is due to the large amount of investors.
This is accentuated in Jerusalem, both by investors themselves and the amount of Jews looking to live in premium areas.
The influence of investors on the market was illustrated in November 2021, when a record amount of housing deals were completed in Israel, due to the purchase tax increase on buyers who already own a property.
Even with the eye watering price rises, mortgage taking hit record levels in 2021. It seemed very likely that many of the factors mentioned above would continue to lead to higher prices, especially in the sought after areas of Jerusalem.
Confirmed record for new housing sales in Israel in 2021
In February 2022, the Bank of Israel confirmed what all the numbers pointed to.
Over 56,000 new homes were sold in Israel during 2021. A new record, and an increase of 37% from 2020.
Jerusalem was one of the most popular areas for new home sales, with other popular areas being Tel Aviv, Ashkelon, Bat Yam, Netanya and Modiin.
In their Financial Stability Report, the Bank of Israel confirmed that they do not forsee a fall in property prices and a rise in rental prices should be expected.
Real Estate prices in Israel continued to surge in 2022
To the surprise of many, and not in line with many other countries - Israel continued to see a big increase in the price of real estate during 2022.
In October 2022, it was confirmed that there had been a 19% rise in Israeli housing prices over the previous year.
And, leading the way was Jerusalem, yet again, which had been seeing a 2.8% rise month-by month and was one of the cities with the biggest growth in new apartments sold.
In terms of the rental market in Israel as a whole, there appears to have been a rise of 8%.
Interest rates rise for seventh straight time to 3.75% at start of 2023
As we update this page at the start of January 2023, the Bank of Israel has announced a rise in interest rates for the seventh straight time to 3.75%.
The rise in borrowing costs has surged since April 2022 with the Bank of Israel attempting to curb inflation.
In their statement on the latest rise in interest rates, the Bank of Israel noted that house prices in the country have increased at a significantly higher rate in the past 12 months.
Meanwhile, there are signs that we may be about to witness major changes in the housing market in Israel. The number of constructions starts and permits remain higher than in the past, whilst home purchase transactions and the volume of mortages continues to decline.
Will real estate prices start to come down in Jerusalem?
This is a key question you are no doubt here to comprehend, and is the most asked question by some distance for us on a daily basis.
Virtually every time we show a property now, often multiple times a day, we are asked about the market in Jerusalem and where it stands.
It is important to remember that whilst the overall trend as outlined above in Israel does suggest prices will come down marginally, Jerusalem is very much unique.
There simply remains not enough supply, especially in the popular neighborhoods for Anglos, that we cover.
We would not be surprised if the market becomes quite static for the first half of 2023 as many of you consider where things stand in the market.
However, until the end of 2022, Jerusalem as a whole was not seeing the downturn in prices other areas of Israel are. And, that is taking the whole city, not the more popular neighborhoods we cover here at CapitIL Real Estate Agency.
Key numbers regarding Jerusalem property prices in 2022:
Average price of an apartment in Jerusalem: 2,606,255 Shekels. (Was 2,219,516 Shekels in 2021.)
Average price of a an apartment to rent in Jerusalem: 5,000 Shekels per month (5,100 Shekels per month in 2021.)
Number of apartments sold in Jerusalem in 2022: 5790 (4,464 in 2021.)
Average cost per meter of residential property in Jerusalem: 31,400 Shekels (26,100 Shekels in 2021.)
Percentage of Jerusalem population under the age of 17: 40%
Percentage of Jerusalem population between the ages of 18 & 64: 52%
Percentage of residential properties with three rooms: 36%
Percentage of residential properties with four rooms: 26%
All information and data in this key numbers section is taken from the Madlan website, correct as of January 2, 2023. Madlan was established in 2012, in Hebrew. They produce real estate data on Israel property purchases.
How the Jerusalem Real Estate Prices guide works
We hope this introduction to Jerusalem Real Estate Prices will stand you in good stead as you look for a home. Of if you are simply curious about the prices of real estate in Jerusalem.
Since Jerusalem is so diverse and features plenty of different areas, we have split many of them up.
Please click on each area and we aim to provide not only the basic information about each area, but also examples of sold property in recent months to ensure you can receive the most up to date information.
All of the information and data provided here is available on publicly available resources, such as Globes, the Times of Israel and Madlan.
We have, where possible, attempted to source all data and where it comes from.
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To begin your property search, please contact us at sales@capitil.com.